Inventory Management System

- A Case Study on KSRM Steel Plant Limited, Chottogram

Submitted By
Motasim Billah Shahed
Program: MBA
ID No. : R222017
Major in Supply Chain Management
Faculty of Business Studies
Department of Business Administration
International Islamic University Chittagong.

Supervised By
Mr. Abdullah Md. Ahsanul Mamun
Associate Professor
Department of Business Administration
Faculty of Business Studies
International Islamic University Chittagong.

Department of Business Administration

Faculty of Business Studies
International Islamic University Chittagong
Background

Inventory management involves the control of assets being produced for the purpose of sale
in the normal course of the company's operations. Inventories include raw materials
inventory, work in process inventory and finished goods inventory. The goal of effective
inventory management is to minimize the total costs direct and indirect those are associated
with holding inventories. However, the importance of inventory management to the
company depends upon the extent of investment in the inventory. Steel Industry in
Bangladesh is on an upswing because of the strong global and domestic demand.
Bangladesh rapid economic growth and soaring demand by sectors like infrastructure, real
estate, and automobiles, at home and abroad, has put the Bangladeshi steel industry on the
global map. According to the latest report by the Kabir Steel Re-Rolling Mills (KSRM),
Bangladesh is the tenth largest steel producer in the world.
Objectives

The general objective of the report is inventory management of Steel Manufacturing

Industry - A Case Study on KSRM. Specific Objective are-
1. To study about the inventory management pattern of KSRM.
2. To examine the raw material classification for better control.
3. To suggest measures for better inventory control and management.

Methodology

Primary Sources: Secondary Sources:

 Face to Face Conversation.  Websites of KSRM.
 Communication with the organizational  Significant data from the
supervisor. Internet.
 Discussion with officials and concerned experts of  Textbook.
different designation.
Research Problem

The problem faced by the company is they do not have any systematic system to record
and keep their inventory data. It is difficult for the admin to record the inventory data
quickly and safely because they only keep it in the logbook and not properly organized.

Inventory System

An inventory system is a process that tracks stock, supplies and sales through an entire
supply chain. Companies use inventory systems to ensure they know exactly what items they
have available and the location in which they reside.
Inventory systems provide detailed records of new and returned products as they're entering
or leaving the warehouse to help companies organize and account for their stock. These
systems can also track data such as the number of units, cost per unit, serial number, lot
numbers, purchase dates and production dates.
 Types of inventory systems

The way companies manage their inventory systems may vary based on the industry in
which they operate, the size of their business and the resources they have available. Here
are eight types of inventory systems may consider implementing:

1 Periodic inventory system

A company that uses periodic inventory systems counts its stock at regular intervals. For
example, it may choose to review its inventory every quarter. It may also calculate the
financial value of the stock and the raw materials it has available at the same time.

2 Perpetual inventory system

A perpetual inventory system allows a company to track everything related to its inventory and
supply chain in real time. With this method, the company updates stock levels and relevant
reports after every sale, delivery or breakage.
3 Manual inventory management
The manual inventory management method involves tracking inventory manually with a pen
and paper. Newer or smaller retailers often start managing their inventory with this approach
by recording each sale and delivery in a ledger to keep their records current.

4 Inventory management spreadsheets

Many businesses use spreadsheets to manage their inventory by creating columns to track
stock, value, sales figures and more. Depending on which spreadsheet program or
application use, may also be able to share the company's spreadsheets with other team
members remotely, which can improve communication.

5 Dedicated inventory management software

Companies have many choices when it comes to selecting a dedicated inventory
management software system. These programs exist to help professionals organize and
monitor their supply chains.
6 Integrated retail operations solutions
Many large corporations choose to use an integrated retail operations solution to manage their
inventory because it works seamlessly with their existing software, applications and processes.
Implementing this system can help manage a company's inventory, track orders and monitor accounts
all through one interface.

7 Cloud-based solutions
Cloud-based solutions are similar to dedicated inventory management systems, but they use the
internet and store all of their data on third-party servers. This kind of system can make it easier for a
team to access the most current inventory data and communicate with one another remotely.

8 Enterprise resource planning systems

Enterprise resource planning (ERP) systems offer an integrated approach to business operations and
planning. These systems provide a holistic view of a company's finances, operations, inventory and
logistics all in one location.
 Overview of the Organization

KSRM (Kabir steel) is an enterprise of Late Mr. Kabir Ahmed. Founded in 1984, the ship
breaking industry was one of the very first concerns of the Group feeding the group
materials for steel production and other steel producers in the country till today. In 1986
KSRM started our first manual mill for producing steel. Since then the group has gradually
developed its ranges and business wings into various activities and confirmed its reputation
asone of the notable organizations in the steel sector.

Corporate Vision
 Be up to date with the most modern and sophisticated technologies.
 Match the demand of the customers through a diverse product and service range.
 Let tradition and experience be the stepping stone towards success.
 Be a significant contributor in the country construction and shipping industry.
 Make high quality KSRM steel products the market leader.
Corporate Mission
 Minimizing the cost and maximizing the ability of the product while maintaining
 a high-quality standard.
 Constantly increasing logistic support including the shipping line, to reach steel
 users in every corner of the country. Maintaining a good relation with our
 stakeholders with a skilled individual.
 We are continually searching for new avenues to get better as an organization.
 We shall increase our turnover by 100% in the next five years.
 We shall remain socially committed ethical Company.
Flow chart of Local Procurement in KSRM

Goods Received
Notes raised by Generate Net
Warehouse & Requirement from
forwarded to the Supply Plans
passing authority

Material received by
Request for Price &
Warehouse as per
Source
delivery schedule

Material
Issue Purchase
Scheduling &
Order on selected
Communications
supplier
with suppliers

Distribute P.O.
copies to concern
departments
 SWOT Analysis

SWOT analysis is an essential tool to a business environment. The analysis puts light on the
strength, weakness, opportunities and threats of a business environment. The goal of the SWOT
analysis is to thoroughly analyses the internal and external factors and assess the potential of the
environment. The purpose of SWOT analyzing the KSRM industry is to identify and external
factors that influence industry positively and negatively. And valuate the position of KSRM with
the assessment.

Factors incorporating SWOT analysis are:

 Strength
 Weakness
 Opportunity
 Threat
 STRENGTH WEAKNESS

 Cheap labor cost  High Capital cost

 Available work force  Lack of Raw Material processing
 Experienced Workforce services.
 Existing Raw Material  Political Interference.

OPPORTUNITY THREAT

 Domestic Economic Growth.  Height Import Duty.

 Increasing Global Demand.  Political instability.
 Experience Work Force.  Threat to traditional carpentry.
 Global Steel Industry

The steel production volume is estimated to reach 2000 million tonnes in 2024, growing
at a CAGR of 4.50% globally. Multiple factors like rising population growth with an
increase in urban population, growing automobile sector and increased spending on
infrastructure projects are the cause of rising demand for steel. China is also a major
contributor to the global steel industry. India is the fastest-growing market for steel with
an increase in urbanisation, industrialization and infrastructure.
Preposed Solution
 Monitored and Measure

Ballard (1996) answered this question by a number of ways in which stock information can
be categorized in order to describe the properties, status, quantity and location of a product,
the stock information can split into three main categories. The better the monitoring of the
process and the faster the information processing, then in principle and everything else
being equal, the better will be the utilization of space and resources in the warehouse; there
will be fewer errors and better customer service.

Supply Chain Management

During the last decade, supply chain management has made its impression both in academic
and professional fields (Anderson 1999). Many companies have recognized the potential
impact on their competitiveness and financial performance and have re deployed their high
caliber individuals in supply chain management positions. Supply chain management is
much discussed in today’s business world because it constitutes the conceptual base for the
application of a host of new information and automation technologies.
 Seven Principles of Supply Chain Management

Principle 1: Segment customers based on the service needs of distinct groups and adapt the supply
chain to serve these segments profitably.
Principle 2: Customize the logistics network to the service requirements and profitability of
customer segments.
Principle 3: Listen to market signals and aligns demand planning accordingly across the supply
chain, ensuring consistent forecasts and optimal resources allocation.
Principle 4: Differentiate product closer to the customer and speed conversion across the supply
chain.
Principle 5: Manage source of supply strategically to reduce the total cost of owing materials and
services.
Principle 6: Develop a supply chain-wide technology strategy that supports multiple levels of
decision-making and gives clear view of the flow of products, services, and information.
Principle 7: Adopt channel-spanning performance measures to gauge collective success in reaching
the end-user effectively and efficiently.
 KSRM Supply Chain

Steel industry of Bangladesh is driven by many challenges on the ground of limited natural
endowment and growing domestic demand due to high economic development. This creates an
intensely complex industrial mechanism where supply chain of steel industry contributes to a
great extent.
Steel industry is the basic industry which plays a critical role in the sustainable development of
the economy of Bangladesh. As an industry leader, KSRM guides the key parameters of supply
and demand chain of the industry. Ensuring the best quality raw materials with competitive
sourcing is the main challenge within the industry.
KSRM possesses one of the biggest supply chain networks within the steel industry of
Bangladesh. To meet the growing demand of the market and for sustainable growth of the
industry, KSRM supply chain plays a vital role in synchronizing the end-to-end connection.
Starting from the raw material sourcing to delivering the finished steels goods to the customer’s
door, KSRM supply chain ensures the best level of service to meet internal and external
customer satisfaction.
 Risk Management

These risk analysis techniques are of course likely to be applicable in different sorts of
circumstances. The suggested elaboration of risk analysis within the existing Project Framework
and the construction of a risk matrix could be applied in any project situation. It is also important
to note that the use of the individual techniques are not mutually-exclusive. For example, the risk
matrix technique can identify those risks that are thought to be the most serious and/or likely to
occur so that they can then be further investigated through quantitative techniques.

Identify the risk

Anticipating possible pitfalls of a project doesn't have to feel like gloom and doom for organization–
quite the opposite. Identifying risks is a positive experience that whole team can take part in and learn
from. Project risks are anything that might impact the project’s schedule, budget, or success.
Leverage the collective knowledge and experience of entire team. Ask everyone to identify risks
they've either experienced before or may have additional insight about. This process fosters
communication and encourages cross-functional learning.
 Inventory Performance

The use of inventory KPIs helps translate operational performance into financial reporting across
an entire inventory management system to improve production and purchasing processes, cash
flow, and profitability. KPIs quickly translate the impact of many diverse business operations
activities across inventory and supply chain locations into financial data.
Companies with excellent inventory control systems also rely on frameworks to transform their
metrics and KPIs into a common strategic direction. The American Production Control and
Inventory Management Society’s (APICS) SCOR Model and Gartner’s Hierarchy of Supply Chain
Metrics are two of the most popular frameworks for evaluating inventory management
performance as part of broader supply chain networks.
Both are excellent frameworks to rely on when defining inventory metrics that measure supply
chain effectiveness and its impact on profitability.
 Order Cycle Time

This inventory metric is also referred to as order lead time, but order cycle time is the more
popular iteration. Order cycle time measures the time from when a customer places an order to
when they receive their purchased product. This metric reflects how effective inventory
management, supply chain, production and fulfillment operations are.
Order cycle time also sometimes refers to the time between the placement of two back-to-back
orders or the successful delivery of two consecutive orders. Regardless of how company defines
these metrics, should still measure them to get a comprehensive view of order fulfillment process
and where could improve.
 Inventory Turnover

This inventory metric measures how often a manufacturer’s inventory is sold, replaced or turned
over in a specific period. Inventory turnover measures the efficiency of business overall, with a
higher turnover generally meaning greater efficiency. However, while some items carry may
have slower turnovers than others, they may be worth the extra time they spend on the shelf if
they are good money-makers for business.
There are two approaches most often used for calculating inventory turnover. The first is by
dividing sales by average inventory for a specific period. The second is to divide the cost of
goods sold (COGS) by average inventory for a specific period. Check out this inventory
turnover formula article for additional details on this metric.
 Inventory Optimization

Inventory optimization is the process of managing inventory levels across a company's supply
chain to reduce costs, improve customer service, and maximize profits.
By utilizing effective strategies for inventory optimization, can ensure the best possible return
on investment, save money by reducing unneeded stockpiles and improve customer service
levels by having products available when customers need them. Without proper inventory
management, however, business could experience a range of setbacks from loss of revenue due
to stockout costs, to larger costs associated with excess inventory that sits idle on shelves. Now
let's understand the top techniques that businesses use to optimize their inventories.
 Technology on Inventory Management

One of the key ways in which technology is transforming the field of inventory management is
through automation and digitization of inventory processes. By using specialized software and
systems, businesses can automate many of the tasks and procedures involved in managing
inventory, such as recording and tracking orders, generating reports, and calculating stock
levels.
The benefits of automation in inventory management are numerous. First, it can greatly
improve the accuracy and consistency of inventory data, reducing the risk of errors and
omissions. Second, it can significantly reduce the amount of time and effort required to
manage inventory, allowing businesses to devote more resources to other tasks and activities.
Third, it can provide real-time visibility and control over inventory levels, enabling managers
to make more informed and timely decisions.
 Challenges of Incorporating Technology

While the use of technology in inventory management can bring many benefits, it can also
present some challenges, particularly in terms of cost and complexity of implementing new
systems. To take advantage of the latest technology solutions, businesses need to invest in the
necessary hardware, software, and support, which can be costly and time-consuming. In
addition, they need to ensure that the new systems are properly integrated with their existing
systems and processes, to avoid disruptions and disruptions to their operations.
Another important consideration when implementing new technology in inventory
management is the need to provide training and support for employees. While technology can
automate and optimize many of the tasks and procedures involved in inventory management, it
can also require employees to learn and use new skills and tools, which can be challenging and
time-consuming. To ensure that employees are able to effectively use and benefit from new
technology, businesses need to provide them with the necessary training and support.
 Inventory Management Challenges

1. Inconsistent Tracking: Using manual inventory tracking procedures across different

software and spreadsheets is time-consuming, redundant and vulnerable to errors. Even
small businesses can benefit from a centralized inventory tracking system that includes
accounting features.
2. Warehouse Efficiency: Inventory management controls at the warehouse is labor-intensive
and involves several steps, including receiving and putaway, picking, packing and
shipping. The challenge is to perform all these tasks in the most efficient way possible.
3. Inaccurate Data: need to know, at any given moment, exactly what inventory have. Gone
are the days when inventory could be counted once a year with an all-hands-on-deck
approach.
4. Changing Demand: Customer demand is constantly shifting. Keeping too much could
result in obsolete inventory ’re unable to sell, while keeping too little could leave unable to
fulfill customer orders. Order strategies for core items, as well as technology to create and
execute an inventory plan, can help compensate for changing demand.
 Overcome Inventory Management Challenges

1. Centralized Tracking: Consider upgrading to tracking software that provides automated

features for re-ordering and procurement. Inventory management platforms provide
centralized, cloud-based databases for accurate, automatic inventory updates and real-time
data backup.
2. Transparent Performance: Measure and report warehouse performance metrics like inventory
turnover, customer satisfaction and order processing speed to overcome warehouse
inefficiencies. Share this data with employees and suppliers.
3. Stock Auditing: Frequent stock auditing processes, like daily cycle counting, reduce human
error and provide more accurate, up-to-date inventory data for managing cash flow. Organize
audits by category and cycle count smaller inventory samples on a predictable schedule for
more accurate financial data.
 Improvement of Inventory Management

The longer ’ve been in business, the more inventory data have to help forecast sales in
2023. A good forecast will incorporate business’s growth curve, market trends that could
affect bottom line, consumer confidence, and sales and promotions calendar. However, the
one thing know to expect is the unexpected. Good inventory management techniques
won’t solve every small business problem will face in the coming year, but it can go a
long way towards smoothing out the rough patches. Here are five ways (plus a bonus way)
can brighten business’s supply chain with improved inventory management.
 Inventory Management Trends

1. Automation: Inventory management trends are increasingly automated through barcode reading.
It simplifies processes, improves accuracy, and enhances efficiency.
2. Real-time tracking: Technologies like real-time tracking allow businesses to monitor inventory
levels, location, and movement.
3. Cloud-based solutions
Cloud-based inventory management systems provide businesses with flexibility, scalability, and
accessibility.
4. Data analytics: Data analytics helps forecast demand, optimize inventory levels, and improve
supply chain efficiency.
5. Demand-driven inventory management
This involves dynamically adjusting inventory levels based on real-time customer demand signals
and current trends in inventory management.
6. Cross-channel inventory management
Businesses are adopting inventory management strategies that synchronize inventory across
multiple sales channels.
 Conclusion
It is really a complex process to establish supply chain inventory control system. This paper still

has many inadequacies due to time limit. With the development of the supply chain theory,

there is an increasing emphasis on supply chain coordination and cooperation between nodes.

This paper doesn’t have deep study in this perspective. The established model has some

assumptions thus it has the gap with the actual inventory management. At present it only can be

a reference for Men’s Fashion. Considering there are a lot of uncertainties which will influence

the operation of the inventory control model, we need to improve and perfect the model in the

application process.

In today's clothing industry, it is a trend to manage inventory with supply chain management

theory. With the development of the information technology, we believe more and more apparel

enterprise will accept and use the advanced inventory management models.