A SYSTEM STUDY ON THE

INVENTORY MANAGEMENT
OF THE MANILA
SUPERMARKET INC.

ALVAREZ | FERNANDEZ | MEDALLA | MERCULLO | PALAYPAY

THSIE3B - T3 A.Y. 2022-2023
1
RECALL OF THSIE3A
The Problem and Its Setting

2
FINAL SUG MATRIX

3
FINAL SUG MATRIX

4
PROBLEM STATEMENT
The supermarket’s average days inventory on hand for the
year 2021 is 29.7 days, which exceeds their 21 day
standard by 8.7 days resulting in a cost of Php
1,367,618.86 in overages for Slow moving Milk,
Beverages, and Snack items.

5
2
CHAPTER V
Root Cause Analysis

6
INITIAL WHY-WHY DIAGRAM

7
8
9
10
INITIAL WHY-WHY DIAGRAM

11
12
INITIAL WHY-WHY DIAGRAM

13
FINAL WHY-WHY DIAGRAM

14
3
CHAPTER VI
Solution Generation

15
SOLUTION OBJECTIVES

GENERAL OBJECTIVES
▰ To reduce the overage costs of Manila Supermarket

SPECIFIC OBJECTIVES
▰ To improve the inspection process of the supermarket for the products they
receive

▰ To increase their accuracy in forecasting leading to more accurate records

16
CRITERIA FOR EVALUATION
Musts

1. Must be able to reduce 2. Must be able to be

the costs incurred due to implemented within 3
overages months

▰ The pressing problem of the ▰ The problem is deemed

company is focused on alarming considering it has
overage costs an urgency score of 5

17
 CRITERIA FOR EVALUATION
Wants

1. Minimize the cost of the 2. Minimize the implementation 3. Maximize the reduction in costs
implementation time due to overage

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 Objectives/Criteria Alternatives
KTDA FOR INSPECTION
1. New Inspection Policy and 2. Hire a Quality
Musts Training of Employees Management Officer

Go/No Go Go/No Go

1. Must be able to
reduce the costs
Go Go
incurred due to
overages.

2. Must be able to
be implemented Go Go
within 3 months

Wt. Wt.
Wants Wts Information Information
Score Score

1.Minimize the cost

The cost is 0.5(5) The cost is Php 0.5(2)
of the 50%
Php 469.91. = 2.5 508,500 per year. =1
implementation

Can be 0.2(5) Can be

2. Minimize the 0.2(5)
20% implemented = implemented in 4
implementation time = 1.0
in 4 weeks 1.0 weeks

Overage cost Overage cost 0.3(1)

3. Maximize the 0.3(1)
30% reduced by reduced by Php =
reduction in costs = 0.3
19,526.40 19,526.40 0.3

100
Total - 3.8 - 2.3
%
19
 Objectives/Criteria Alternatives
KTDA FOR FORECASTING
1. Invest in a New Inventory 2. Invest in a Business
Musts Management System Intelligence Analyst

Go/No Go Go/No Go

1. Must be able to
reduce the costs
Go Go
incurred due to
overages.

2. Must be able to be
implemented within Go Go
3 months

Wt. Wt.
Wants Wts Information Information
Score Score

1.Minimize the cost Cost is 0.5(4) 0.5(1)

Cost is Php
of the 50% Php 111,202.36 = =
838,442
implementation per 2 0.5

Can be 0.2(1) Can be 0.2(5)

2. Minimize the
20% implemented in = implemented in 4 =
implementation time
12 weeks 0.2 weeks 1

Overage cost
0.3(4) Overage cost 0.3(4)
3. Maximize the reduced by Php
30% = reduced by Php =
reduction in costs Php
1.2 684,356.48. 1.2
519,558.40.

100
Total - 3.4 - 2.7
%
20
 Objectives/Criteria Alternatives
KTDA FOR CYCLE COUNT
1. Implement New Type A SKU 2. Hire an Inventory
Musts Monitoring Policy Manager

Go/No Go Go/No Go

1. Must be able to
reduce the costs
Go Go
incurred due to
overages.

2. Must be able to be
implemented within Go Go
3 months

Wt. Wt.
Wants Wts Information Information
Score Score

1.Minimize the cost 0.5(2)

Cost is Php 0.5(5) Cost is Php
of the 50% =
26,734.08 = 2.5 521,960
implementation 1

0.2(5)
2. Minimize the Implementation 0.2(5) Implementation
20% =
implementation time time is 4 weeks =1 Time is 4 weeks
1

Overage cost 0.3(3) Overage cost 0.3(3)

3. Maximize the
30% reduced by Php = reduced by Php =
reduction in costs
418,491.37. 0.9 418,491.37 0.9

100
Total - 4.4 - 2.9
%
21
List of Final Solutions
4
CHAPTER VII
Proposed System

23
 New Inspection Policy and Training of Employees

Purpose
▰ To ensure that a proper system of checking is in place to detect wrongly shipped
SKUs immediately.
▻ As a result, it would prevent SKUs from being wrongly accepted and scanned
into the system, causing overage.
Warehouse Inspection Team Process Orientation
▰ A short orientation will be conducted by the WH supervisor for the inspection team,
composed of WH checkers and receivers in relation to the new inspection policy that
will be implemented

24
 New Inspection Policy and Training of Employees

MAN
JOB ROLE RESPONSIBILITIES
Tasked with overseeing the inspection process by ensuring that the warehouse
Warehouse
checkers and receivers are properly trained in inspecting the goods as recommended
Department
by the new and standardized inspection policy. In addition, the supervisor conducts
Supervisor
last checks to proof all errors that might have arisen during the inspection process.
Tasked with receiving the goods and checking whether the barcodes (especially on
cases with multiple barcodes printed), product descriptions, and the number of cases
Warehouse Receiver for the goods matches with the Purchase Order. Also participates in the inspection
process once the checking of case details is complete, to minimize delays due to the
new process.
Mainly responsible for checking the physical condition and contents of the cases
Warehouse Checker received to ensure that faulty or wrongly shipped cases are not wrongly received by
the warehouse.
25
 New Inspection Policy and Training of Employees

Method

26
 Invest in a New Inventory Management System

Purpose
▰ The main purpose of implementing a new inventory management system in the
supermarket is to address all forecasting and sales tracking problems.
Employee Orientation
▰ Prior to the full implementation of the new inventory management system, an
orientation regarding the system will be implemented.

27
 Invest in a New Inventory Management System

Man
▰ The Inventory Management Software will be used by 3 employees from the
purchasing department and 4 employees from the warehouse.
Job Role Responsibilities
The warehouse personnel are tasked with receiving the delivered items and
Warehouse Personnel
scanning/encoding them into the system.
The purchasing department is tasked with determining the order quantity and
Purchasing Department
purchase orders.

Material
▰ The only change in material is the inventory software, changing from the Mercury
System to the NetSuite ERP System.
28
 Invest in a New Inventory Management System

Setup of Netsuite Software

▰ The installation of Netsuite involves the loading of the software into the
supermarket’s system. After Installation, the supermarket would need to migrate
data by the IT personnel from the previous Mercury System onto the Netsuite
System.
Employee Training/ Initial Testing and Software Customization
▰ Netsuite Education Services
▰ Netsuite Customer Success

29
 Implement New Type A SKU Monitoring Policy

Purpose
▰ The purpose of this solution is to change the supermarket’s existing reactive monitoring or cycle
counting policy.

Planning with the Management

▰ Before the implementation of the new monitoring policy, the DSA and WH supervisors must
coordinate with the management to classify product categories depending on value contribution
to sales.

Warehouse Monitoring Team Orientation

▰ Before the implementation of the new type A monitoring or cycle counting policy, a short, one
hour orientation will be held by the supervisors of the selling area and warehouse.

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 Implement New Type A SKU Monitoring Policy

JOB ROLE RESPONSIBILITIES

Tasked to conduct orientation to his/her employees regarding the new
inventory monitoring policy for type A products. In addition, the supervisor
Warehouse and Direct Selling Area Department
is in-charge in ensuring that the employees religiously practice all of the
Supervisors
techniques and learnings they gain whilst undergoing training and in doing
the actual cycle counting.

Tasked to cycle count Type A products in the DSA using the inventory count
DSA Employees (inclusive of Selling Area Team sheet (Appendix 23) to be given by the supervisor. Moreover, it is their task
Leader & Company Merchandiser (Diser) to ensure that counts are accurate and that the counting process is done
completely and efficiently.

Tasked to cycle count Type A products in the WH using the inventory count
WH Employees (inclusive of Warehouse Man, Bad
sheet (Appendix 23) to be given by the supervisor. Moreover, it is their task
Orders Man, Warehouse Receivers, & Warehouse
to ensure that counts are accurate and that the counting process is done
Checkers)
completely and efficiently.

31
 Implement New Type A SKU Monitoring Policy

Material
▰ Inventory cycle count record
sheet
Method
▰ The monitoring policy

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 COST BENEFIT ANALYSIS

INITIAL COSTS RECURRING COSTS

▰ Costs incurred at the beginning ▰ Costs occurring regularly.
of the implementation of the
solution.
Correspondin Corresponding
Final Solutions Components
g Initial Costs Final Solutions Components Recurring
Costs
New Inspection Policy and
Orientation Cost Php 469.91
Training of Employees New Inspection Policy and
- -
Training of Employees
NetSuite annual subscription
Php 102,291
Invest in a New Inventory cost Invest in a New Inventory NetSuite annual subscription
Management System Php 102,291
Management System cost
Orientation/Training cost Php 8,911.36

Implement New Type A Implement New Type A

Orientation/Training Cost Php 26,734.08 - -
SKU Monitoring Policy SKU Monitoring Policy

Php TOTAL Php 102,291

TOTAL
138,406.35 33
 COST BENEFIT ANALYSIS

BENEFITS
▰ Expected reduction in overage Costs

Final Solutions Benefit

New Inspection Policy and Training of Employees Php 19,526.40

Invest in a New Inventory Management System Php 519,558.40

Implement New Type A SKU Monitoring Policy Php 418,491.37

TOTAL Php 957,576.17

34
NET PRESENT VALUE

NPV Contribution
Year Benefit (Php) Cost (Php) Benefit - Costs
(Php)

0 - 138406.35 -138406.35 -138,406.35

1 957,576.17 102,291 855285.17 846,817.00

2 957,576.17 102,291 855285.17 838,432.67

3 957,576.17 102,291 855285.17 830,131.36

4 957,576.17 102,291 855285.17 821,912.24

5 957,576.17 102,291 855285.17 813,774.49

TOTAL 4,012,661.41
CASH FLOW DIAGRAM

Payback Period of
60 days.
5
CHAPTER VIII
Implementation Plan & Conclusions

37
General Implementation Plan

38
Implementation of New Inspection Policy

39
Implementation of New Inventory Management
System

40
Implementation of New Cycle Count Policy

41
 CONCLUSION

PROBLEM
▰ The most pressing problem is that the supermarket’s average days inventory on hand
for the year 2021 is 29.7 days, which exceeds their 21 day standard by 8.7 days
resulting in a cost of Php 1,367,618.86 in overages for slow-moving Milk, Beverages,
and Snack items.
ROOT CAUSES
▰ Inspection process is not able to detect wrongly delivered items
▰ Cycle count process is only reactive to inventory circumstances
▰ Forecasting process only considers 3 most recent 21-day sales periods

42
 CONCLUSION

ROOT CAUSES
▰ Inspection process is not able to detect wrongly delivered items
▰ Cycle count process is only reactive to inventory circumstances
▰ Forecasting process only considers 3 most recent 21-day sales periods

SOLUTIONS
▰ Implement a new inspection policy
▰ Invest in a new inventory management system
▰ Implement a new cycle count policy (Strictly monitor type A inventory)

43
 CONCLUSION

IMPACT OF SOLUTIONS
▰ Cost the supermarket Php 188,651.42 for implementation
▰ Php 957,576.17 in savings yearly (70.02% of overage costs for the
relatively slow-moving Milk, Beverages, and Snacks)

44
THANKS!

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