INTRODUCTION+final

1.1. INTRODUCTION
The system for recording the data and maintaining the inventory in an
organization is the part of inventory management and control system.
The inventory is some thing which we have to hold for the manufacturing of
goods/products also every thing which is hold in the organization and capture some
space is included in the inventory.
Example
a. Raw material
b. Machinery
c. Medicines, etc.
Any item which is used in the organization or linked with the organization and
continually recorded /maintained is called inventory.
The Soda Ash Plant is located in the northern part of Punjab at Khewra,
District Jhelum. The initial work of setting up a soda ash plant at Khewra site dates
back to 1929, however, commercial production began in 1944. The original capacity
of the plant was 18,000 tons per annum that has increased to 200,000 tons per annum
through a number of expansion projects. The plant is currently meeting about 80% of
the Country's requirement for Soda Ash, and by using locally made equipment and
raw materials, provides savings to the Nation's foreign exchange reserves.
Soda Ash is an essential raw material used in the manufacturing of Glass,
Detergents, Caustic Soda, Soap, Paper, Textile, Water Softener, Petroleum, Washing
and Laundry Soaps.
The major raw materials used in the manufacturing of Soda Ash are Salt,
Limestone and Coke. Salt and Limestone are locally available at Khewra, in
abundance, whereas Coke is procured from the Pakistan Steel Mills, Karachi. Other
essential requirements are Natural Gas, Furnace Oil, Ammonia and Water.
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The product range was diversified in 1995 with the commissioning of a 10,000
MT Refined Sodium Bicarbonate Plant. The basic raw materials for its manufacture
are soda ash and carbon dioxide, both of which are available at the Khewra Works.
The Soda Ash Business strives for continuous improvement of its already excellent
SHE (Safety, health & environment) record. This commitment is demonstrated by the
prime position given to SHE in all aspects of Business operations, and the programs
in place. In 1998, ICI Pakistan was the joint winner of the Chief Executive's Safety
Award through the Soda Ash submission of ‘SITARA', safety through teamwork. The
quality initiative was first introduced at the Soda Ash Business in 1985 with a
fundamental part of ‘Total Quality' being the implementation of management systems
based on the principle of prevention. Subsequently, the process of Quality
Improvement Teams was introduced, which improved the quality of the products and
operating efficiencies. Currently, the Business is working to implement International
Quality Standards (ISO-9002) in all areas of its activities.
The Soda Ash Business employs 472 permanent Staff and has 2500 people
who work as Contractors and Suppliers. Most of the permanent employees are
provided housing facilities on the Company's well-developed residential estates.
Other facilities like the Winnington School, Alkali Sports Club, Winnington Club,
hockey & football grounds, squash courts, 20 beds Winnington Hospital, with a full
time Medical Superintendent and a Lady Medical Officer supported by visiting
specialists and a well trained paramedical staff, are also availed by the employees. As
part of its community development initiatives, the Business routinely extends support
to local schools, colleges, parks and other institutions in the area.
Throughout its history, ICI has been at the forefront of scientific discovery and
developing inventions for the marketplace with products such as fertilizers, plastics,
man-made fibres, anaesthetics, heart drugs, herbicides, pesticides, commercial
explosives, waterborne paints, reactive dyes and biodegradeable plastics.
In 1993, ICI demerged its bioscience businesses of pharmaceuticals,
agrochemicals, specialties, seeds and biological products into a separate, publicly
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listed company, Zeneca Group PLC – a demerger which released substantial value for
ICI shareholders. Zeneca later merged with Astra to form Astra Zeneca PLC.
Four years later ICI made its biggest ever acquisition when it purchased four
businesses from Unilever - National Starch, Quest, Unichema and Crosfield - for $8
billion. These operations were merged into ICI to form the basis for the
transformation of ICI into the world's leading specialty products and Paints Company.
Since that acquisition, ICI has been divesting its cyclical bulk chemical
businesses for value to new owners who are keen to grow and invest in those sectors.
Since mid-1997 ICI has made acquisitions totaling some GBP 5.7 billion and made
over 50 divestments totaling more than GBP 6.1 billion. Divestment proceeds have
been used to repay debt and restore the strength of the balance sheet.
Each business in the ICI Group is responsible for its own research and
technology resources and for driving innovation to meet the needs of its customers
and markets. The strengths of businesses in specific areas such as coating science in
Paints, polymer chemistry in National Strach, and sensory science in Quest, support
the prime technology platforms of ICI Group, namely biosciences, chemistry and
catalysis, and materials. These platforms (or megathemes) constitute a portfolio of
projects, which accelerate long-term technology development of the Group, and avoid
business duplication while reducing individual business risk.
The Senior Vice President R&T is supported by a Group Technology Office,
whose role is to facilitate cross business interactions, aid strategic research planning,
coordinate corporately funded programmes and identify external technology
opportunities.
There are two corporately sponsored programmes comprising:
1. Business Link for cross business technology development, and
2. Strategic Research for cross business technology exploration with academic
partners.
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1.2. PROBLEM STATEMENT
As per the projects, my main emphases will be on the inventory of items that
how to process it in the system and controls the need of inventory and the relation of
inventory with the respective departments there is also a comparison statement and
analysis on there previous inventory management system and now which they are
going to inaugurate.
The main concern for this project is that, what is the need of effective
inventory management and control system and is it works for the organization?
In the ICI Soda Ash business there is too much inventory in use and controlled
in different departments. There is a strong inventory management and control system
but there are few problems in waste of inventory/stock and final use also the software
installed (MAXIMO) is not supporting to all the departments.
The inventory management and control system in ICI Soda Ash is fully
automated company Also it is one of the companies who are going to implement ERP
and compared to national organizations it is many a times better but as discussed there
are few problems.
So these few problems gave rise to the need of an effective and efficient
inventory management and control system. The main emphasis of the project will be
on the comparative study of inventory management with in the organization and on
information management system.
1.3. OBJECTIVES
Inadequate control of inventories can result in both under and over stocking of
items. Under stocking results in missed deliveries, lost sales, dissatisfied customers,
and production bottlenecks; overstocking unnecessarily ties up funds that might be
more productive elsewhere.
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Inventory management has two main concerns. One relates to the level of
customer service that is to have the right goods, in sufficient quantities, in the right
place, and at the right time. The other relates to the cost of ordering and carrying
inventories.
The overall objective of inventory management is to achieve satisfactory level of
customer service while keeping inventory costs within reasonable bounds. Towards
this end, the decision maker tries to achieve a balance in stocking. The two
fundamental decisions that must be made relate to the timing and size of order i.e.,
when to order and how much to order.
1. Knowledge of lead times and lead time variability.
2. Reasonable estimates of inventory holding costs, ordering costs, and shortage
costs.
3. A classification system for inventory items.
4. To give a new idea about the inventory management and control system to the
newly manufacturing businesses mainly in Pakistan.
5. Give idea that how to analyze which inventory management system is good
for the organization and what points are keenly seen for this purpose.
6. To find out the problems of previous system and at the same time the need of
new system.
7. To prove myself a good researcher and capability to work hard.
1.4. SIGNIFICANCE OF THE STUDY
In Pakistan there is not good transportation system and a traditionally imports
the machinery and most of the raw material. So, there is a need to know that what
kind of inventory management system is good for organization and how to control
inventory. As, ICI Soda Ash is a multinational company and for the manufacturing of
soda both imported and regional material is used so one can easily analyze that how
can control inventory and which kind of inventory system is good. This research is
helpful for those organizations which are newly based manufacturing concerns or raw
material holding companies and wants to implement new software of inventory. This
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study guides a lot to those industries which are seeking for improvement and having
expansion plan.
1.5. SCOPE OF THE STUDY
Now a day in the global world competition the organizations are facing tight
competition. To avoid that and make the good position in the market they have to
reduce their costs. The main cost which can be compensated and bit avoid is the
inventory management/material management cost.
As, this paper involved a through study of comparative inventory control &
management system of a well organized multinational Company i.e. ICI Soda Ash
Pakistan. ICI already have computerized system of inventory management and for this
purpose they use Australian software called MAXIMO and now they are
implementing new software SAP which is the world most expensive software. It is a
German software that worth of Rs 100 Million.
This research is also having some relationship with the departmental
treatments with the inventory management and control system of ICI Soda Ash.
This project is helpful for those companies which are manufacturing type of
business or having too much input and output of inventories.
The study in this project is limited up-to the study/working of previous system
(MAXIMO) and newly established system (SAP).
This project tells about all the aspects of inventories i.e. raw material
inventory or any inventory in stores, how to manage this? How to place this? How to
record this? How to destroy or use it etc?
There is a questionnaire about this study and all questions can resolve through
this study and also provide a line to the new organizers that how to tackle the problem
of inventory management and control system.
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1.6. LIMITATIONS
This study is limited up-to the comparative study of two inventory
management systems, one is MAXIMO and the other is SAP inventory management
system. There is not much discussion or comparison of physical inventory
management system but, a complete study that, how to generate inventory orders,
store, and data base of inventory management in both the systems. Main concern is
with the inventory software study and analyses that, which system is more suitable.
There is nothing which is self made and nothing which is taken from financial
reports. All the data is taken from both the inventory management system, from
management staff and from the answers of questionnaire.
1.7. PROJECT OVERVIEW
Basically this project of inventory management and control system is the
degree requirement. In this project one can easily analyze the importance of better
inventory management & control system and also seen the importance of an
established system.
1.8. AIM OF THE PROJECT
• This project is done with very purpose of evaluating the problems in the
inventory management and control system.
• Find out the problems in inventory control and management system in ICI.
• Gain some knowledge about the working system in the big organizations.
• Make some relationship between different commodities to analyze the features
of different kinds of inventory.
• Make a true relationship or differentiation between the different inventory
management and control systems in ICI soda ash.
• To make my research skills on the best level it is the basic need.
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• To find out the problems of previous system and at the same time the need of
new system.
1.9. FEASIBILITY REPORT
I choose this project after seen about all pros & cones about its completion.
There are following feasibility reports about this project.
1.9.1. Technical Feasibility
The work is too much technical in this project as there is comparison off too
much things because, there inventory system is too large. All the things are may not
be provided in this project as there privacy policy is too much stricken. There is
nothing which is very difficult technically in this project.
1.9.2. Economic Feasibility
This project has importance in the economic means because there is a great
dissuasion about the inventory management and control system from different
prospects. As in the organizations this is in common practice so we have need to
know that, what system is easier and economical. As per the economic feasibility
there is nothing which is disturbing the working of this project but there is too much
which is there to tell us about the importance of better inventory management and
control system in economic means.
1.9.3. Operational Feasibility
To work out the different problems in the inventory management system and
differentiation of previous and new inventory management system there is need of too
much information to continue this study. There is not such kind of thing which is not
achievable if there is cooperation and coordination of my teachers and organization.
1.10. REASONS FOR SELECTING THIS THESIS
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Management has two basic functions concerning inventory. One is to establish
a system of keeping track of items in inventory, and the other is to make decisions
about how much and when to order. To be effective, management must have the
following:
• A system to keep track of the inventory on hand and on order.
• A reliable forecast of demand that includes an indication of possible forecast
error.
1.11. DEFINITIONS OF THE TERMS
There are following important definitions are mentioned which are used in this
theses and have much importance.
1.11.1. Accounting Data
Accounting data is used to define G/L accounts. It includes the account name,
the account type, the currency in which the account is managed, information as to
whether an account may be posted to directly and which financial budget it is
allocated to. The accounting data is maintained in the Financial Accounting
component.
1.11.2. Purchasing document
A purchasing document contains information such as the vendor number, the
purchase order date, the terms of delivery, the material number and the order quantity.
1.11.3. Material document
A material document is created when a goods receipt is posted. It includes the
posting date, the quantity delivered, and perhaps also the delivery note number and
the purchase order number the goods receipt refers to. The material document records
quantity changes.
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1.11.4. Accounting document
An accounting document is created when a valuated goods receipt or an
invoice is posted. It contains details of the individual postings with the account
number, posting key and the amount. The accounting document records changes in
value.
1.11.5. Plant
The plant is the fundamental organizational element in SAP where materials
are managed. In practice an SAP plant is often used to represent a production facility,
a warehouse or an operating site. Some reasons why plants are important in SAP are;
1. The quantity of inventory is tracked per plant.
2. The value of inventory is tracked per plant.
3. Each plant has its own data for material purchasing, sales and production.
4. Each plant may have its own materials requirement planning.
1.11.6. Storage Locations
Each plant may have several storage locations in which quantities of stock are
tracked.
1.11.7. SITARA
S means safety of everything (i.e.) man, machinery, time, production and
suppliers. I means improvement which is the improvement in everything as the SH&E
planning is a continuing process. T means team (i.e.) for the proper working of SH&E
department there is team work. A means audit (i.e.) after deducting a problem there is
audit for best solution and checking of the problem that why it is occurs. RA means
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responsive action (i.e.) whenever there is problem in the area of SH&E what to decide
and what action could be the best.
1.11.8. Indent
Indent is also a kind of order but, it is for that goods/material which are not
regularly or on the bases of economic order quantity. An indent can be raised at any
time.
1.11.9. MAXIMO
MAXIMO is an accounting based Australian software and use for many
purposes e.g. inventory management & control system, job analysis and descriptions,
financial records, etc.
1.11.10. SAP
SAP is German software also used for the inventory management and control
system, job description, accounting records, etc.
1.11.11. GRN (Goods Receipt Note)
It is made when an order is received means, when received some material or
any thing which is an order, for that approval of received goods GRN is made.
1.11.12. PO (Purchase Order)
Purchase order means whenever there is need of raw material or any thing or
time come for an order, an order is executed. It is on the bases of purchase order.
1.11.13. Lead time
Time interval between ordering and receiving the order
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Chapter # 2
LITERATURE REVIEW
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It is better if we exclude the human factor from inventory consideration. The
most important function of inventories is insulation. A reserve of material can be
tapped whenever a delay in a preceding stage threatens to curtail operations following
stage. There are following three kinds of inventories finished goods, Raw material and
inventory in-process.
The inventory prevails in the finished goods form and ready for sale is called
finished goods inventory. The inventory which is store in the stores and is the basic
need for the production of a product and used in the product is the raw material
inventory, it is direct material. The example for that is lime stone placed in the store
and used n some future period. The inventory purchase for the use of production and
already in process is called the inventory in process.
If inventory is excessive, holding cost is too high. On the other hand, if
inventory is limited, either ordering or opportunity cost is significant. For given three
data items, ordering and holding costs and annual demand, the objective is to hold that
inventory level, which minimizes costs and satisfies daily demand without any
shortfalls.
Hamdy A. Taha, 1998 taking the concept of inventory management as, a
business or an industry usually maintains a reasonable inventory of goods to ensure
smooth operation. Traditionally, inventory is viewed as a necessary evil-too little of it
cause costly interruptions, too much results in idle capital.
Van Horne & John Wachowicz, 2001 said that, Inventories form a link
between the production and sale of a product. A manufacturing company must
maintain a certain amount of inventory, known as work-in-process, during production.
Although other types of inventory-in–transit, raw material, and finished goods
inventories are not necessary in the strictest sense, they allow the firm to be flexible,
inventory in transit-that is, inventory between various stages of production or stage-
permits efficient production scheduling and utilization of resources. Without this type
of inventory, each stage of production would have to wait for the preceding stage to
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complete a unit. The possibility of resultant delays and idle time gives the firm an
incentive to maintain in-transit inventory. Raw material inventory gives the firm
flexibility in its purchasing, without it, the firm must exist on a hand-to-mouth bases,
buying raw materials strictly in keeping with its production schedule. Finished goods
inventory allows the firm flexibility in its production scheduling and in its marketing.
Jonathan Blain et al, 1998 presents the idea about inventory as, the inventory
is a list as well as a physical collection of material items. Inventory management
entails the planning and control of material stocks by quantity and value. It has also
come to include the planning, data entry, and documentation of all goods movements
to, from, and within the storage location in the warehouse used by the company.
Hamdy A. Taha, 1998 he said about inventory problem as, the nature of the inventory
problem consists of repeatedly placing and receiving orders of given sizes at set
intervals. From this standpoint, an inventory policy answers the following two
questions:
1. How much to order?
2. When to order?
The answer to the first question determines the economic order quantity
(EOQ) by minimizing the following cost model:
All these costs must be expressed in terms of the desired order quantity and
the time between orders.
He described the above mentioned costs as; purchasing cost is based on the
price per unit of the item. It may be constant, or it may be offered at a discount that
depends on the size of the order. Setup cost represents the fixed charge incurred when
an order is placed. That cost is independent of the size of the order. Holding cost
represents the cost of maintaining the inventory in stock. It includes the interest on
15
Total
inventory
cost
Purchasing
cost
Setup
cost
Holding
cost
Shortage
cost

capital as well as the cost of storage, maintenance, and handling. Shortage cost is the
penalty incurred when we run out of stock. It includes potential loss of income as well
as the more subjective cost of loss in customer’s goodwill.
Hamdy A. Taha, 1998 describe the second answer that (when to order?) as, it
depends on the type of inventory system with which we are dealing. If the system
requires the periodic review, the time for receiving a new order coincides with the
start of each period. Alternatively, if the system is based on continuous review, new
orders are placed when the inventory level drops to a prespecified level, called the
reorder point.
Van Horne & John Wachowicz, 2001 says that, large inventories allow
efficient servicing of customers demands. If a certain product is temporarily out of
stock, present as well as future sales to the customer may be lost. Thus there is an
incentive to maintain stock of all types of inventory. Hamdy A. Taha, 1998 says that,
the inventory problem deals with how much and when to order an inventory item,
these decisions are made by minimizing an appropriate cost function that
encompasses the ordering, holding and shortage cost.
Jonathan Blain et al, 1998 tells about large stock quantities as, when a
warehouse contains a very large number of stock management units, it is possible to
manage them and conduct a physical inventory of them on the bases of samples.
Because the relationship between the sampled items and the rest of the warehouse can
be determined automatically, it is possible to infer the full warehouse inventory from
the result of physical counting the selected sample. The good receipts and issues at the
warehouse can be managed by using the same technique.
Van Horne & John Wachowicz, 2001 says that, the traditionally extolled
advantages of increased inventories, then, are several. The firm can affect economies
of production and purchasing and can fill orders more quickly. In short, the firm is
said to be more flexible, and the obvious disadvantages are the total cost of holding
the inventory, including storage and handling cost. An additional disadvantage is of
obsoleteness.
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Jonathan Blain et al, 1998 said, when you post a movement of goods, the
value of this stock is also updated. A chain of consequent postings occurs. Also they
say each movement of material causes the system to create a document recording the
amount and values, as well as the time and date of movement. This document serves
as proof that the goods were dispatched. When the goods arrive at the destination, the
entry of the goods receipt completes the proof of the movement. They also says in his
book that, when goods are delivered that were ordered by a purchase order, the system
locates this purchase order document and proposes default data from it to form the
goods receipt documentation and If, a delivery note arrives with no reference to a
purchase order, you can lock up the possible purchase orders under the material code
or the vendor number.
Van Horne & John Wachowicz, 2001 says that, the maintenance of Large
inventories has come from an understanding of a Japanese inspired inventory control
system called just-in-time or JIT for short. JIT breaks with the conventional wisdom
of maintaining large inventory stocks as buffers against uncertainties. The basic
objective of JIT is to produce a required item at the exact time needed, or” just-in-
time”. Inventories of all types would thus be reduced to a bare minimum. Reduction
in inventory carrying cost is one of the more obvious results of the JIT system.
Jonathan Blain et al, 1998 says that, a reservation is an instrument for making
sure that this material is moved from stock to consumption at the correct moment. It
assumes that the stock will be on inventory to enable this to happen, and it assumes
that no other production order or customer order has already been promised this
quantity of material. When goods are moved from a warehouse, there has to be a
posting of material withdrawal. This triggers the posting of a reduction in the quantity
and value of the warehouse stock of this material. If some material stock is transferred
from one warehouse to another, and if these warehouses belonging to different
company codes, the financial accounting systems of both company codes must be
coordinated to reflect that something of value has moved from one to the other. The
quantity inspection may also take place after the material has been received into the
warehouse and planned for issue. In such cases, the material is transferred to quality
inspection stock on its way to the consumption location. They tells about the special
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stock as, the essential characteristics of a special stock of a material are that it is
owned by a company or a person different from the owner of the storage location in
which it is on inventory.
Jong, 1997 and Ericsson, 1995 says Information technology provides
humanity with the ability to keep in touch without traveling, while it enables
businesses to improve efficiency and effectiveness, as well as to develop new
business.
Pine, 1992 says that, ultimately, customers ask for mass customization, for
which suppliers have to deliver products at affordable prices, with enough variety so
that nearly every customer feels that he buys a customized product.
Jonathan Blain et al, 1998 says that, each material can be selected individually
or on the bases of membership of a material group subject to last-in-first-out (LIFO)
evaluation. The material can also be allocated to a LIFO pool and valued in this
context. Also he writes in the favor that, if the moving average price (MAP) control
technique is used, the difference is posted to the stock account, where it contributes to
the average price the next time it is computed. They writes for material planning as,
the main function of material requirement planning is to monitor stock at the end of
each day and automatically generate purchase order proposals to be forwarded to the
purchasing department.
Logistics concerns the efficient, as well as the effective flow and storage of
goods, services and related information from points of origin to points of
consumption, for the purpose of conforming to customer requirements [CLM, 1991].
In logistics there are active objects which provide capacity, comprising resources for
production, transportation and storage, and there are passive objects which demand
capacity, comprising goods, information and money [Verwijmeren, 1994b].
Optimization in logistics management focuses on satisfying market
requirements, expressed in mutually agreed quality aspects, such as time, place,
quantity and condition, for minimal costs [Vermunt, 1993].
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Jonathan Blain et al, 1998 writes that how to control stock level as, it is
Important for you to keep stock level low. Having the system automatically reorder
stock based on evidence it has collected regarding consumption and delivery enables
you to do this. The inventory management function ensures that every time a material
is taken from the warehouse, the stock level is checked to see whether it has fallen
below the reorder level. If this is the situation, an entry is made in the material
requirements planning file to generate a purchase order on the next material
requirements planning run.
Jonathan Blain et al, 1998 write about Material requirements planning (MRP)
as, Material requirements planning is normally carried out at the plant level, so all the
stock available in the plant is recognized by the planning run, whether its storage
location. The calculation of net requirements compares the forecast quantities of each
material for each period with the quantities that is expected to be available. If a deficit
is foreseen, a purchase order proposal is generated.
Jonathan Blain et al, 1998 writes about some accounts as, if an account has
been assigned in a purchase order, that amount cannot be changed if a goods receipt
that has been subjected to evaluation is entered during invoice verification. If a down
payment arrangement has been made, you receive a system message to this effect
when the invoice verification function becomes aware that you are about to enter an
invoice receipt for that order or for that vendor, if a standard agreement for a down
payment is in force. The material management-warehouse management system
supports the processing of all movements, including goods receipts and good issues
initiated by the inventory management system, as well as goods issues from the sales
and distribution system. The warehouse management system provides control over the
movements within a warehouse, including stock transfers from replenishment orders.
The transfer requirement does not execute the stock movement. A movement is
executed only if a transfer order is created and confirmed. They also say that, if you
want to know what should be moved and how much, the creation of a transfer
requirement will provide the answers. If a movement has already been started by the
confirmation of a transfer order and you try to create a transfer requirement for the
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same goods, you will discover whether the order was created automatically or
manually, and weather an amount of the transfer has already been moved.
The need for integrated information processing across locations is increasing.
Organizations and people that previously operated in near isolation, start co-operating
in organizational networks, while hierarchical organizations are decentralizing and
become loosely coupled entities. The sharing of information is particularly needed to
improve coordination in co-operating organizations which put emphasis on
communication, collaboration, and decentralized decision making [Mullender, 1989]
[Khanna, 1994] [ITU/ISO, 1996]
Ellram, 1991 & Jones, 1985 says that, one of the ways to improve business
performance is supply chain management, which concerns the inter-organizational
management of goods flows between independent organizations. Supply chain
management is an integral approach to planning, control and monitoring of total
materials flows from suppliers to end users, aiming at improved customer service at
reduced overall costs.
Another person Harasim, 1993 said that, computer systems which are
interconnected through communication networks make up computer networks.
Computer network technology concerns the integration of computers and
telecommunication infrastructures, creating a world-wide web of computer networks.
In this era, an unprecedented progress in computer network technology is
being made. Due to fundamental innovations in electronics in the past decades, the
power of computer components has increased dramatically. The information
transformation capacity of microprocessors shows exponential growth, as the number
of transistors per chip doubles approximately every eighteen months [Clemens, 1997].
In advanced computer network technology, applications can be designed to
fully meet the desired functionality, since ample capacity is, or could be made,
available to achieve optimal effectiveness of the applications. From the perspective of
an almost unlimited information processing capacity, advanced applications heavily
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consume processor time, memory space and bandwidth. Because computer network
technology is growing beyond traditional technical limitations, the major challenge
becomes the creation of useful applications. In the long run, the functionality and
performance of the worldwide web of computer networks seems mainly to be limited
by the creativity of mankind in conceiving new applications, and the willingness of
people to heavily invest in computer network technology [Rowe, 1995].
Advanced technology enables organizations to operate flexibly as a unit,
regardless of their locations, exchanging information between dissimilar computer
systems, amongst others about inventory levels and delivery schedules [Upton, 1996].
The business reconfiguration induced by computer network technology is an
evolutionary process, which can divide in five stages: localized exploitation, internal
integration, business process redesign, business network redesign and business scope
redefinition [Scott Morton, 1991] [Venkatraman, 1994]. Each electronic integration
enables a quasi-hierarchy or quasi-market mechanism for co-ordination of activities in
a business network by exchange of information. The information exchange in
electronic integration may reflect transactions, inventory status, process details and
eventually expertise [Scott Morton, 1991] [Venkatraman, 1994].
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3.1. TYPE OF RESEARCH
This type of study is undertaken to determine the relationship between
different inventory management systems. The study is correlative in nature and
depends upon both primary and secondary data collection. The main theme is to
understand the different inventory management systems and how to analyze their
differences for which the direct study is also used and indirect tools are also used. I
use the following tools for the collection of data.
3.2. SOURCES OF DATA
I am using the following sources for the collection of data to complete my research
and these sources are those which are not bised and giving true picture of the study.
These sources are as follow:
3.2.1. Interviews
I have conducted ten interviews for collection of data. These ten peoples are
those which are working on both the inventory software i.e. (SAP and MAXIMO) and
having good knowledge of system. The questions asking from these all peoples are
same which, can given good results for this research and one can easily analyze the
comparison of both systems.
3.2.2. Inventory software study.
For further comparison I study the both inventory software in detail, the study
is from the book of SAP R/3 and MAXIMO user manual.
3.2.3. Working on systems
I do some work on MAXIMO after taking the description from the regular
management employees, at this time the SAP is not fully installed so, I don’t work on
that practically but can take the review of that system as per requirement.
23

3.2.3. Through management staff
There is a hell of data which I collect from ICI Soda Ash with the help of
management staff. The complete theory and pattern of inventory management of both
systems i.e. SAP and MAXIMO are given by management staff. They also provide
needed information to me when I feel requirements and for the betterment of my
study.
3.2.4. Software consultants
I am interviewing and meeting with some peoples which are using the
inventory softwares and also collets some information about the inventory softwares
from internet.
3.3. PROCEDURE
3.3.1. Sample
There is no use of sampling technique for the purpose of calculation but, I take
some persons from the organization and conducting interviews and than analyzing
their comments. As there is a just analysis of two inventory software, so I can take the
interviews as a sample study and analyzing.
3.3.2. Instrument and measures/source of data
The data is analyzed on the following bases:
First collect the data about all the inventory management system and there
theory. A detailed document made and set differentiation statement. All the points
which are essential to be discussed in the comparative study collected and make clear
that it will be the best solution and correct data. After data collection with this set
pattern the analyzing points made on the bases of difference in both the systems
24

3.4. DATA
3.4.1. Coke Scenario
The under mention steps will be followed for the production Coke related
scenarios only.
For Coke purchasing in ICI:
Step.1 Requisitioned will create a Purchase requisition of Unsorted Coke.
Step.2 Purchasing department will generate a Purchase Order with reference to
Purchase requisition.
Step.3 Partial or full Good receipt will be entered against that Purchase order.
Step.4 According to Goods receipt quantity and value, Invoice and payment will be
done.
Step.5 After screening or sorting the unsorted coke, it will be transfer into Sorted
coke and into Undersized.
For understanding, take the following example.
For Example:
Step.1
Suppose the following are the Stocks and the values of unsorted coke, sorted
coke and Undersized
Step.2
Now a Purchase Order of Unsorted coke is created
25

Purchase order # : 4500000036
Material : Unsorted Coke
Quantity : 1000 Ton
Unit Price : 15 PKR
Value : 15000PKR
Step.3
Entered Goods receipt for full quantity and value
Step.4
Now Stock Status of Unsorted coke
Step.5
Now physically 100 Ton of Unsorted coke is sorted. Out of 100 Ton, 80 ton is
converted in Sorted Coke and 20 Ton is identified as Undersized.
Now transfer posting is entered from Unsorted coke (100 Ton) into Sorted coke (80
Ton) first then Undersized (20 Ton)
Step.6
When 80 ton is transferred from unsorted coke to Sorted coke then the Stock
status is
26
Unsorted Coke
Stock = 1100 Ton
Value = 16000 PKR
MAP = 14.55 PKR
Sorted Coke
Stock = 50 Ton
Value = 600 PKR
MAP = 12 PKR
Undersized
Stock = 25 Ton
Value = 125 PKR
SP = 5 PKR

In this Transfer, SAP system credit Unsorted Coke stock account with
-1164(80x14.55) and debit Sorted Coke Stock account with +1164
Step.7
Then 20 ton is transferred from unsorted coke to Undersized, and then Stock
Status is
In above transfer, SAP system credit Unsorted coke with –291(20x14.55) approx. and
debit Undersized with +100(20x5) while the Remaining value 191 approx. will be hit
in a separate G/L account known as Expense/revenue from stock transfer.
3.5. OLD SYSTEM (MAXIMO)
MAXIMO is basically Australian software worth Rs. 20 million, installed in
ICI Khewra in January1988, under the version of 3.0A with Oracle version 7 and was
later upgraded in November 1999, with version 4.1 under Oracle8, so basically Oracle
8 is working to maintain the databases.
MAXIMO is among some of those software and application, which at present
have been installed at ICI Soda Ash. MAXIMO is a complete ERP solution. At
present there are three servers working for ICI Soda Ash. Out of these three servers,
27
Unsorted Coke
Stock = 1000 Ton
Value = 14545.45 PKR
MAP = 14.55 PKR
Undersized
Stock = 45 Ton
Value = 225 PKR
SP = 5 PKR

one separate server is solely for MAXIMO applications. MAXIMO performs the
following functions:
• Up dating of records
• Inserting of records
• Deleting of records:
MAXIMO also provides on-line services to the management. MAXIMO
provides all the relevant information by maintaining the security. The user can access
particular information by using particular code.
Oracle 8 is quicker and easily accessible and further it provides all the
information about particular queries. Provide Security options to access the
MAXIMO functions.
3.5.1. Functions of MAXIMO
Areas of MAXIMO activities include the following:
1. Plant Maintenance
2. Purchase
3. Inventory Control
3.5.2. Purchase
MAXIMO has to define the purchases being made locally or imported. For
this the following sub tasks are:
28
INDENT PLANNING
Purchase
Requisition
PURCHASE
Purchase Order
STORE
Goods Received Note
(GRN)

Explanation:
The above figure shows the purchase process of ICI Soda Ash. If there is
shortage of any kind of material or equipment the system automatically raises the
indent. With that indent all the details relating to the specified product is written like
vender, cost, size, type etc. with that one thing more is given that is priority of product
if the product has high priority it will purchased without goes to planning department.
If that is not an important thing then is go to planning department and they
issue purchase requisition and after that on the basis of that requisition the purchase
department generates three carbon copies of PO, one copy of it goes to vender, one
with purchase and one to finance. After that vender sends goods along with bill so
after inspection and all formalities a GRN (goods receipt note) is generated by store
and the items are known part of inventory. That is how it works. All the documents
are generated through system and can be tracked at any time. So we can say that it’s a
module of ERP.
3.5.3. Inventory Control
This function of MAXIMO actually relates to the stores. It keeps the records
of things issued from the stock, items added back to the stock, and new items added
into the inventory. It maintains 21000 items of engineering store and also maintains
IT store, Admin store, Stationary store, and hospital store. The basic function of the
inventory control is to maintain the inventory of items and also re-order level of
items.
In order to get any thing issued from the store, a Requisition Slip for that
particular thing is required. The storekeeper will issue those things to the department
29

concerned and will perform the entry in MAXIMO. The original stock will
automatically get reduced.
3.5.3.1. Inventory Control - Add a New Item to a Store
1. Click on the Inventory Control Application from the Inventory Module of the
MAXIMO Main Menu.
2. Click on the Insert / New button of toolbar.
3. Enter a valid Item Code in the Item Field.
4. Enter Description of the Item. Double Clicking on the Description will open
the Long Description box. Complete detailed description of the item should be
entered here.
6. Enter Type. Double clicking on this field will pop up a list of values from
which selection can be made.
7. Enter Responsible Section. Double clicking on this field will pop up a list of
values from which selection can be made.
Important: All items must have a Responsible Section Identified. If
Responsible Section is missing then GRN for the item cannot be generated
8. Deferred to Date field should be empty. This field is filled only in case the PR
for the item is to be blocked. The field is only valid for items which have a Re-
order Quantity.
9. Enter Standing Rate to indicate if the item has a standing (running) rate
contract. This is a Y (yes)/N (no) field. Double clicking on this field will
toggle the value between Y and N. Y means that the item has a standing
(running) rate contract.
10. Enter Supply Type. Double clicking on this field will pop up a list of values
from which selection can be made.
11. Enter Location (store room where the item will be located). Double clicking
on this field will pop up a list of values from which selection can be made.
12. Enter Default Bin.
30

13. Enter Category. Double clicking on this field will pop up a list of values from
which selection can be made. Valid Values are:
STK Stocked Items (items with Re-order quantity specified)
NS Non-Stock Items (items with no Re-order quantity specified)
SP Special Order Items (items which are not generally kept in the store and
are a one time purchase)
14. Specify Reorder Level, if required.
15. Specify Minimum Qty.
16. Enter Issue Unit. Double clicking on this field will pop up a list of values from
which selection can be made.
17. Enter Supplier Code of a Preferred Supplier in the Supplier Field. Also specify
Model, if any.
18. Specify Reorder Qty.
31

19. Specify Order Unit. Double clicking on this field will pop up a list of values
from which selection can be made.
20. Specify Lead Time (Days).
21. Specify Unit Conversion Factor to convert Order Units to Issue Units.
Important: Ensure the following:
a. While adding a new Item in MAIN store, the same item must
be added to:
• SHUTDOWN Store
• CAPITAL Store
• INSPECTION Store
b. While adding a new Item in LAB, STATIONERY, HOSPITAL
stores then the same item must be added to:
• INSPECTION Store
Caution: For SHUTDOWN, CAPITAL and INSPECTION Stores set:
a. Category = NS (Non-Stock)
b. Reorder Level = 0
c. Reorder Qty = 0
d. Minimum Stock = 0
3.5.3.2. Adding an Existing Item to a New Store
1. Click on the Inventory Control Module from the Inventory Icon of the
MAXIMO Main Menu.
2. Enter the Store code of the Existing Item in the Item Field and press Enter.
3. Enter Location of Storeroom in which the Item already exists.
4. Click on Add Item to Storeroom Location from the Options Menu.
5. Add Item to Storeroom Location window will pop-up. Specify the new
Storeroom Location in the New Location Field
6. Add bin information of the new store in the Default Bin Field for the new
Storeroom
32

7. If other information relating to the item is the same as specified in an existing
storeroom then enter the name of the existing store in the Copy from Existing
Location Field.
8. Click on the Save Button to add the item in the new storeroom.
3.5.3.3. Resetting Reorder Levels for a Store Item
1. The Inventory Control Module does not allow the Re-order Quantity of an
item to be set to Zero. In case the re-order quantity of an item has to be set to
zero then select Other Applications from the File Menu in the Inventory
Control Module.
2. Select CHNGEINV (Change Ordering Levels) from the pop-up window and
Click on the Run Button.
3. A Logon Box will appear.
4. Enter User name and Password and click on the Connect Button.
5. Enter Store Location and press the Tab key.
6. Enter Item Code; on pressing the Tab key, Minimum and reordering
information of the item will be displayed.
7. Change, Minimum Stock Level, Re-order Level and Re-order Quantity as
required.
8. After ensuring that the correct values have been entered, click on the Update
Inventory Button.
9. To Exit the module Click on the Exit Button.
3.5.3.4. Material Receipts
1. Material Receipts can only be made for items which have a PO with 'APPR'
status.
2. Click on the Material Receipt Module in the Inventory Icon of the MAXIMO
Main Menu
3. Enter PO Number for which items have been received.
33

4. Click on the Materials Icon to go to Receipt Screen. If any material has been
received prior to the current session and the material is still pending inspection
then these receipt transactions will be shown on the screen.
Note: The screen will be blank if no material has previously been received or
the previously received material has been inspected and the GRN posted
5. Enter the correct Received Date at the bottom of the screen. The field defaults
to the System Date and can be changed if the material was received on a
previous date.
6. Enter the Consignment Number on the Bottom of the screen. The format is as
follows:
Bilty Number * Truck Number * Total Weight
It is imperative that this format is strictly followed. The following rules apply:
a. If bilty number is not available, then the letters 'NB' should be entered
as the Bilty Number
b. If truck number is not available then it can be left blank
c. Total Weight must be mentioned in Kilograms
34

d. The Slashes ('*') are important and the program will not accept any
other format.
Examples of Valid Consignment Numbers are as follows:
a. TR345 * GLT 3456 * 5000
b. NB * 1000 * 5000
c. NB * * 200
Important: The Bilty Number is vital for the production of the Bilty Report
every day, any mistake in entering the proper information will result in
erroneous report for Octroi matching by the Purchase Personnel.
Make sure that all corrections to the entries are made before the Save Button is
clicked. The program does not allow editing previously Saved Entries.
7. Enter the Challan Number on the Bottom of the screen if available. The format
is as follows:
Challan Number * Challan Date
35

The Slashes ('*') are important and the program will not accept any other
format.
Important: If this format is not properly followed then the Challan Number
and Date will not appear on the GRN.
8. Enter the PO Line number of the Item that is currently being received in the
Line # Column. On hitting Tab or moving the cursor to the next field, the
program will copy the Item code, Description, Consignment #, Remaining
Quantity to be delivered, Challan #/Date, Storeroom Location on the line.
9. Ensure that the following is correct:
a. Quantity. Quantity defaults to the remaining quantity to be delivered
and can be different from the current receipt
10 Repeat steps 8, and 9. Till all the receipts have been entered.
11. Click on the Save Icon to save the transactions.
[[
Important: The program will not allow any edits to Saved Transactions.
12. If PO Line number are not readily available then click on the Select Ordered
Items from the Options Menu in the Receipt screen. This will display all the
items on the PO. Select all the items that have been received in the current
delivery and Click on the OK button. This will have the same effect as in Step
8. All other rules and restrictions apply as stated above.
Note: If Items that have been classified as Rotating Equipment are being
received, then after Step 8. Or 12 a window will pop up and ask for the new
rotating equipment numbers. These numbers have to be unique and proper
care should be taken that no wrong number is entered. This will then create an
equipment record in the Equipment module.
3.5.3.5. GRN Generation
1. A Goods Receipt Note (GRN) is generated for all material receipts.
2. GRN can be generated through Auto or Man. GRN Modules.
36

3. The Auto GRN Module generates GRNs for all material receipts for which no
GRN have previously been generated.
4. Click on the Auto GRN Button in the Material Receipt Module to initiate the
Auto GRN process.
5. Click on the Start Process Button to generate the GRN.
6. Click on the Man. GRN Button in the Material Receipt Module to initiate the
Manual GRN process.
7. Enter the PO numbers for which GRN has to be generated.
8. Click on the Save Button after all PO Number have been entered. If any PO
Number has to be deleted from this list click on the Stat Check Box alongside
the list and that PO Number will not be included in the Manual GRN Process
9. Click on the Start Process Button to generate the GRN
10. All receipts are grouped by PO Number and Item Wise Responsible Section
and individual GRNs are generated for each group
11. When the process is complete a summary is displayed showing the total
number of GRNs generated and the numbers of the First and Last GRN
37

12. The GRN generated through both the Auto and Man. GRN process can be
printed using the GRN Report.
3.5.3.6. Correction to Material Receipt Entries
1. Entries made in the Material Receipts Modules cannot be edited after the
transaction has been saved. To remove errors in entry of quantity for a
material receipt the following procedure should be used. This procedure will
also correct the corresponding GRN.
This procedure can correct quantity errors for only those receipts whose GRN
has not been approved.
38

2. Click on CORRECPT from the Other Application Window in the File Menu
of the Material Receipts Module
3. Enter Login ID and Password.
4. Enter PO Number.
5. Enter PO Line Number.
6. When the cursor is moved to the Item Number field, a list of material receipts
entries against the PO Number/Line which are still to be inspected is
displayed. Select the line whose quantity has to be corrected.
7. The following fields are filled automatically based on the information already
provided:
• Date received
• Store Location
• GRN Number / GRN Line Number
• GRN Status
• Old (Original) Receipt Qty
39

• Unit Cost
• Old (Original) Line Cost
8. Enter New Receipt Quantity.
9. New line cost based on the new receipt quantity is computed and displayed in
the respective field.
10. Click on the POSTING Button after ensuring that the New Receipt Quantity is
correct.
11. In case of wrong entry Click on the CLEAR Button to clear the screen.
3.5.3.7. GRN Approval
1. After inspection of materials the GRN has to be:
a. updated to reflect the accepted and rejected quantities and
b. posted to update the store current balances
2. For Imported POs the following information is required before posting
a. Currency exchange rate
b. Handling Charges in Pak Rupees
3. If the GRN includes items that have been classified as rotating items then on
approval of the GRN the Equipment record is automatically updated to reflect
the proper storeroom location of the equipment.
4. To initiate the GRN approval and Posting module Click on the Approve GRN
Button in the Material Receipt screen.
5. Enter the GRN number.
6. Update the Accepted Quantity Column. If the Accepted Quantity is less than
the GRN Quantity than the balance will show in the Rejected Quantity
Column and a Rejection code will have to be entered. The Rejection code can
be selected from a pop list.
7. Additional Comments upto 50 characters can be added.
8. Click on the Save Button to save the updates.
9. Update Exchange Rate in case of Imported POs.
10. Enter Handling Charges, if any
40

11. Click on the Approve Button to recompute the new GRN base cost based on
the new Exchange Rate and Prorate the Handling Charges on all the line items
for which the Accepted Quantity is greater than zero.
12. After ensuring that all values have been properly updated click on the Posting
Icon to post the GRN.
Important: For Imported POs, it is essential that Currency Exchange Rate and
the Handling Charges have been added to the GRN before posting
Once a GRN has been posted the changes CANNOT be reverted back.
13. In case of rotating items in a GRN, after the posting process is complete the
system will display a list of Equipment Numbers that have been allocated to
the Equipment. It is imperative that the same numbers be punched physically
on the equipment.
41

3.5.3.8. GRN View
1. GRNs in either Waiting for Approval ('WAPPR') or Approved ('APPR') Status
can be viewed on the screen by using the View GRN Module.
2. View GRN Module can be initiated by clicking on the View GRN Button in
either the Inventory Control or the Material Receipts Module.
3. GRN information can retrieve by specifying any one or a combination of the
following fields:
• GRN Number
• PO Number
• Responsible Section
• Supplier
• Status
3.5.3.9. Material Issues
1. Material issues should only be made on the basis of approved requisition slips.
2. Two types of requisition slips can be used for withdrawal of materials from
the stores:
• Manual (Hand written requisition on pre-printed requisition book same as
prior to MAXIMO installation)
• Requisition slip generated by MAXIMO (Computer printout)
3. In both cases a Valid Cost Centre/Capital Special Job Number and signature of
Approving Manager will be required on the Requisition Slip.
Important: Costs against a piece of equipment/location can only be accrued if
the requisition slip is generated through MAXIMO.
42

4. Click on the Issues and Transfers module from the Inventory Icon of MAXIMO
Main Menu.
5. Enter the Storeroom Location from which the issues are to be made.
6. Enter Issue To in the field at the Bottom of the Screen
7. Enter Transaction Number at the Bottom of the Screen.
8. In case of hand written requisition slips, enter the following information in the
respective columns:
a. Item Number
b. Quantity
c. Debit GL Account (Cost Centre/Capital Special Job Number)
Click on the Save Icon to record the issue.
9. In case of MAXIMO generated slips the following steps need to be performed:
43

a. Click on Select Reserved Items in the Options Menu. This will open
windows with all the current reservations being displayed.
b. Enter the Work Order/Store Req. Number in the Selection Criteria
field and click on the Refresh Button.
c. Only items reserved against the Work Order/Store Req. will be
displayed.
d. Select item(s) to be issued and click on the Copy Button.
e. Click on the Close Button when all items to be issued have been
selected and copied.
f. Change the Quantity as required for each item
g. The Transaction Number, Work Order, Debit GL Account, Location,
Equipment columns will be filled.
Click on the Save Icon to record the issue.
Important: Add Debit GL Account if missing.
Extremely Important:
All Transactions are being done on an On-Line, Real Time System and all
entries are auditable. Extreme Care should be taken before posting of any transaction.
All discrepancies in Item Store Codes, Quantities, Values, Ambiguity in Descriptions
should be resolved before making any transaction.
All transactions when SAVED cannot be altered or deleted. However, the
system provides facilities for adjustments in case of correction of wrong entries.
3.5.3.10. View Issue / Return Transactions
1. Select Other Applications from the File Menu in the Issues and Transfers
Module.
2. Select VIEWISSUE (View Issue / Return Transactions) from the pop-up
window and Click on the Run Button.
44

5. Enter Transaction number and press the Tab Key
6. If any transaction has been saved with the specified number in the current
month, then these transactions will be displayed in a pop-up box.
7. If multiple transactions have been saved using the same Transaction Number
then all the transactions will be displayed.
8. Highlight the transaction in the pop-up box and click on the OK Button.
9. To Exit the module Click on the Exit Button
3.5.3.11. Delete Issue / Return Transactions
1. Select Other Applications from the File Menu in the Issues and Transfers
Module.
45

2. Select DELISSUE (Delete Inventory Issue / Return Transactions) from the
pop-up window and Click on the Run Button.
5. Enter Transaction number and press the Tab Key
6. If any transaction has been saved with the specified number in the current
month, then these transactions will be displayed in a pop-up box.
7. If multiple transactions have been saved using the same Transaction Number
then all the transactions will be displayed.
8. Highlight the transaction in the pop-up box and click on the OK Button.
9. After confirming that the selected transaction has to be deleted, click on the
Delete Record Button.
10 To Exit the module Click on the Exit Button.
3.5.3.12. Material Returns
46

1. Material Returns can be made at:
a. the prevailing store average cost of the item
b. at a value other than the store average cost
2. Click on the Inventory Return Button in the Inventory Control Main Screen
3. Enter the User Name and Password
Important: Inventory Return is a Password Secured Application and only
authorized personnel are allowed to enter Return Transactions.
4. Select the Store Location from Dialogue Box.
5. Enter Item Code; if the item code is valid the description of the item will be
displayed when the cursor is moved to the next field.
Note: A complete listing of the Item Codes can be viewed by pressing the F9
Function Key.
6. Enter Cost Code or Capital Job Code in the Cost Code Field to which credit
has to be given.
Note: A complete listing of the Cost and Capital Job Codes can be viewed by
pressing the F9 Function Key.
8. If the item being returned is either a Motor, Pump, Gearbox or Compressor
than its Equipment Number must be entered in the Equipment # Field.
47

8. Enter Return Quantity.
Important: Return Quantity cannot be zero or less than zero.
9. Enter Return Value. The field defaults to the current average value of the item.
This value can be changed to any value other than negative values. The current
average value of the item is constantly displayed in the Current Average Field
for reference.
10. Enter remarks in the Special Comments Field, if any
11. After ensuring that the values specified above are correct, click on the Posting
Button to make the Return or the Exit Button to cancel the transaction.
3.5.3.13. Material Adjustments
1. Click on the Inventory Adjustment Button in the Inventory Control Main
Screen
2. Enter the User Name and Password
Important: Inventory Adjustment is a Password Secured Application and
only authorized personnel are allowed to enter Adjustment Transactions.
3. Select the Store Location from Dialogue Box.
48

4. Enter Item Code; if the item code is valid the description of the item will be
displayed when the cursor is moved to the next field.
Note: A complete listing of the Item Codes can be viewed by pressing the F9
Function Key.
5. Enter Cost Code or Capital Job Code in the Cost Code Field to which credit
has to be given.
Note: A complete listing of the Cost and Capital Job Codes can be viewed by
pressing the F9 Function Key.
6. Current Average Value of the Item is displayed in the Current Average Field.
7. Enter Adjustment Quantity.
Important: Adjustment Quantity can also be zero or less than zero.
8. Enter Adjustment Value. The field defaults to the current average *
Adjustment Quantity. This value can be changed to any value including
negative values. The current average value of the item is constantly displayed
in the Current Average Field for reference.
9. Enter remarks in the Special Comments Field, if any
49

10. After ensuring that the values specified above are correct, click on the Posting
Button to make the Adjustment or the Exit Button to cancel the transaction.
3.5.3.14. Adjustment of Octroi and Freight (Month End Procedure)
1. Click on the Inventory Reports Button in the Inventory Control Main
Screen.
2. Click on the Run Report Button to run the report.
3. After making necessary adjustments the items whose average value has
been affected by the current adjustment are displayed on the screen and
this report can also be printed, if required.
50

3.5.3.15. Write-off / Physical Count Reporting
1. Select Other Applications from the File Menu in the Inventory Control Module.
2. Select WRITEOFF (Write offs/ Physical Count) from the pop-up window and
Click on the Run Button.
5. Enter the list of Item Code for which write off or Physical Count Report has to be
generated.
6. Click on the Check box if any item code has to be deleted from the list of item
codes.
7. Click on the Save Button to save the list.
51

8. A Pop-up window will appear. Click on either
• Write off With Value
• Write off Without Value
• Stock Verification
To generate the respective report
9. To Exit the module Click on the Quit Button.
3.5.3.16. Store Requisitions
1. Items can only be issued from the stores on the basis of an approve Store
Requisition Slip.
52

2. Store Requisition Slips are generated by:
a. Work Order Module
b. Store Requisition Module.
Items required against a Work Order, are specified in the Estimated Materials and
can be issued from the store after approval of both the Work Order and the Store
Requisition Slip, which is generated through a report.
Items that are not related to a Work Order but need to be issued from any store are
requisitioned through the Store Requisition Module. These items can only be
issued after approval of both the Store Requisition and the Store Requisition Slip,
which is generated through a report.
3. Click on the Stores Requisition Module from the Inventory Icon of the MAXIMO
Main Menu.
53

4. Click on the Insert Icon to generate a new Store Requisition. A new requisition
number is automatically generated in the Store Request # Field.
5. Enter a brief description in the description field.
6. Requested by and Date, Status and Status Date, Modified By and Date Fields are
filled automatically after insert.
7. Specify Date Required.
8. Specify GL Account (Cost Centre)
9. Specify the Initials of the Approving Authority in the Forwarded To Field.
10. Enter Department. Double Clicking on this field will pop up a list of Valid
Departments
11. Click on the Line Item Icon to specify the Items required
54

12. Enter Item Code, Quantity required and Storeroom Location for all the items that
are to be drawn from the stores.
13. Click on the Save Icon to save the Store Requisition.
Note: All Store Requisition Slips Require Signatures of the Approving Authority.
3.5.3.17. Item Assembly Structures
1. Spares list of an Item which has been classified as a Rotating Item should be built
in form of an Item Assembly Structure. The advantage of having an Item
Assembly Structure is that the Spares list can be copied to all equipment having
the same item code i.e. the spare list need not be typed again and again for all
equipments.
2. Click on the Item Assembly Structures Module from the Inventory Icon of the
MAXIMO Main Menu.
3. Click on the Insert Icon to create a new Item Assembly Structure.
4. Enter the Store Code of the Rotating Item in the Item Field for which the item
assembly structure is to developed
5. Enter Remarks in the Remark Field.
6. Enter Parent Item Number in the Belongs to Field.
7. Enter Item Code, Quantity and a Remark for all the items that belong to the Item
Assembly Structure.
8. Click on the Save Icon to save the structure.
3.6. NEW SYSTEM (SAP)
3.6.1. Introduction
The objective of this document is to cover the description and definition of
scenarios relevant to the ICI Soda Ash Business function SAP Materials Management
module sub-component of Inventory Management. Inventory Management includes the
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descriptions of goods movements for material Issues and Receipts, Material Reservations,
Stock transfers and Transfer postings, Material Batches and stock Inventory.
3.6.2. Overview of Inventory Management
SAP Materials Management Inventory Management system allows;
• Managing stocks on a quantity and value basis
• Plan, enter, and check materials and their respective goods movements
• Carrying out evaluations of system based and actual physical stock availabilities
and post differences (if any)
3.6.2.1. Managing Stock by Quantity
In the Inventory Management system, the physical stocks reflect all transactions
resulting in a change in stock and thus in updated inventory levels. An overview of the
current stocks of any given material is available in real time.
For each material, not only the stocks in the warehouse are shown, but also the
stocks ordered but not yet delivered, reserved for production or for a customer, and the
stocks in quality inspection can also be monitored.
3.6.2.2. Managing Stock by Value
Stocks are managed not only on a quantity basis but also by value - a prerequisite
for cost accounting. With every goods movement, the following values are updated:
• The stock value for inventory management
• The account assignment for cost accounting
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• The corresponding G/L accounts for financial accounting via automatic
account assignment
Note: In ICI Soda Ash Business both the quantity and the value are updated
automatically when entering a goods movement.
3.6.3. Goods Movement
Goods movements include both "external" movements (goods receipts from
external procurement, goods issues for sales orders) and "internal" movements (goods
receipts from production, withdrawals of material for internal purposes, stock transfers,
and transfer postings).
For each goods movement a document is created which is used by the system to
update quantities and values and serves as proof of goods movements.
Note: In ICI Soda Ash Business Function Goods receipt/issue slips are printed to
facilitate physical movements and the monitoring of the individual stocks in the
warehouse.
3.6.3.1. Inventory Stock Differences
The adjustment between physical stocks and book inventories can be carried out
in SAP. Different movement types are available for carrying out stock adjustments in the
system. Authorizations for these movements need to be set up in the SAP system for
adequate control and monitoring of stock adjustments.
Note: In ICI Soda Ash Business Function different movement types will be available for
carrying out stock adjustments in the system. (For a complete listing of the material
movement types and their description, see Movement Types section in this document
3.6.4. Inventory Management -Overview
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The following flow diagram illustrates the inventory management process;
Inventory management-Overview
Note: In ICI Soda Ash Business Inventory Management will allow the following
functions as illustrated by the diagram above;
a) Goods receipt
b) Goods issue
c) Stock management at storage location
d) Monitoring of stock in and out through various movement types and their
respective impacts on quantity and values
3.6.5. Integration of Inventory Management within SAP
Inventory Management (IM) is part of the MM Materials Management module
and is fully integrated in the entire logistics system (see following graphic).
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Material is procured from external sources on the basis of the requirements
determined by Material Requirements Planning and manual Purchase Requisitions. The
delivery is entered in Inventory Management as a goods receipt. The material is stored
(and managed under Inventory Management) until it is delivered to customers (Sales &
Distribution), or is used for internal purposes (for example, for production).
During all transactions, Inventory Management accesses both master data (such as
material master data) and transaction data (such as purchasing data) shared by all
logistics components.
3.6.6. Goods Movements Details
A goods movement (also called a material movement or stock movement) is an
event that causes a change in stock.
Note: The ICI Soda Ash Business function will allow the following types of goods
movement;
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a) Goods Receipt
b) Goods Issues
c) Stock Transfers
d) Transfer Postings
These goods movements will be monitored through material movement types.
Details follow.
3.6.6.1. Goods Receipt
A goods receipt (GR) is a goods movement with which the receipt of goods from
a vendor or from production is posted. A goods receipt leads to an increase in warehouse
stock.
3.6.6.2. Goods Issue
A goods issue (GI) is a goods movement with which a material withdrawal or
material issue, a material consumption, or a shipment of goods to a customer is posted. A
goods issue leads to a reduction in warehouse stock.
3.6.6.3. Stock Transfer
A stock transfer is the removal of material from one storage location and its
transfer to another storage location. Stock transfers can occur either within the same
plant or between two plants.
3.6.6.4. Transfer Posting
A transfer posting is a general term for stock transfers and changes in stock type
or stock category of a material. It is irrelevant whether the posting occurs in conjunction
with a physical movement or not. Examples of transfer postings are:
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• Transfer posting from material to material
• Release from quality inspection
• Transfer of vendor supplied material into company's own stock
3.6.7. Accounting Principles for Inventory Management
In the SAP Inventory management system, the accepted accounting principle of
no posting without a document applies. According to this principle, a document must be
generated and stored in the system for every transaction/event that causes a change in
stock. When posting a goods movement in the SAP System, the following documents are
created:
3.6.7.1. Material document
When a goods movement is posted, a material document is generated that serves
as proof of the movement and as a source of information for any applications that follow.
3.6.7.2. Accounting document
If the movement is relevant for Financial Accounting (that is, if it leads to an
update of the G/L accounts), an accounting document is created parallel to the material
document. The G/L accounts involved in a goods movement are updated through an
Automatic Account Assignment (For details please refer to SAP MM Valuation Business
Blue Print).
3.6.7.3. Changes to a Document
Once a goods movement has been posted, it can no longer be changed. If a
reversal of the movement or change in the quantity of material moved is required, a new
document must be entered in the system.
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3.6.7.4. Document Numbers
A material document is identified by a document number and the material
document year. An accounting document is identified by the company code, the
document number, and the fiscal year. The material document number and the accounting
document number are different.
3.6.8. Inventory Management-Goods Receipt Process Flow
The following flow schematic illustrates the Goods Receipt process whilst
highlighting the accounting principle for Inventory Management – Goods Receipt.
Inventory management-Goods Receipt
Note: The ICI Soda Ash Business function will allow stock to be blocked for usage if and
when required
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3.6.9. Inventory Management-Movement Type Concept
3.6.9.1. Movement Type
When a goods movement is entered in the SAP Inventory Management system, a
movement type must be entered to differentiate between the various type goods
movements. A movement type is a three-digit identification key for a goods movement.
The following table contains examples of movement types.
3.6.9.2. Goods Movements and Movement Types
Note: The ICI Soda Ash Business function will allow the following goods movement
types as illustrated in the table below;
Movement Type Description
101 Good Receipt for PO into store
102 Good Receipt for PO into store – reversal
103 Good Receipt for PO into GR Blocked stock
104 Good Receipt for PO into GR Blocked stock – reversal
105 Release GR blocked stock for warehouse
106 Release GR blocked stock for warehouse – reversal
122 Return delivery to vendor
123 Return delivery to vendor – reversal
124 Return delivery from GR blocked stock
125 Return delivery from GR blocked stock – reversal
311 Stock Transfer from Storage location to Storage location
551 Withdrawal for scrapping from unrestricted use stock
552 Withdrawal for scrapping from unrestricted use stock – reversal
561 Receipt per initial entry of stock balances into unrestricted use stock
562 Receipt per initial entry of stock balances into unrestricted use stock – reversal
3.6.9.3. Control Functions of the Movement Type
The movement type has important control functions in Inventory Management.
Note: In ICI Soda Ash Business Function movement types will allow for
• updating of stock quantity
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• updating of stock values
3.6.9.4. Results of Goods Movements in the System
In ICI Soda Ash Business function when a goods movement will be entered, the
following chain of events will occur in the system:
• A material document is generated, which is used as proof of the movement and as
a source of information for any other applications involved.
• If the movement is relevant for Financial Accounting, one or more accounting
documents are generated.
• The stock quantities of the material are updated.
• The stock values in the material master record are updated, as are the stock and
consumption accounts.
Depending on the movement type, additional updates are carried out in participating
applications. All updates are based on the information contained in the material
document and the accounting document. For example, in the case of a goods issue for a
cost center, the consumption values of the items are also updated.
3.6.10. Inventory Management-Goods Movement Process Flow
The following flow schematic illustrates the Goods movement process whilst
highlighting the accounting principle for Inventory Management – Goods movement.
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Inventory Management-Material Movement
3.6.11. Goods Movement and Material Type
Note: In ICI Soda Ash Business function the following types of goods movements will
be available for use with their respective material Types and characteristics;
Goods In Goods Out Goods In / Out
Purchase from Vendor to GR
Blocked Stock
(All Material Types)
Sale of Goods
(Finished Materials)
Transfer Posting
(All material types)
Purchase from Vendor to stock
(Raw Materials)
Write off of Goods
Stock Transfers
Purchase from Vendor and
charged directly to Cost Center /
Asset (All material types)
Scrapping of materials
Write in of Stock
Goods produced by in-house
production (Finished Materials)
3.6.12. Good Receipt Functionalities
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During entry of a goods receipt for a purchase order, the system proposes the
item's open purchase order quantity as the quantity received. If the delivered quantity
differs from the open purchase order quantity, the proposed quantity can be changed.
When the goods receipt item is entered, the system compares the quantity
delivered with the open purchase order quantity and immediately reports any under or
over delivery.
3.6.12.1. Open Purchase Order Quantity
The open purchase order quantity is the quantity still to be delivered for a
Purchase order item.
3.6.12.2. Under Delivery
In the standard SAP System, under deliveries are allowed. It is also possible to
enter an under delivery tolerance percentage in the order item.
When a quantity of goods is received that lies within the under delivery tolerance
range, the quantity is interpreted as a partial delivery and is accepted as such. The system
does not issue a warning message. If the quantity of goods received lies below the under
delivery tolerance, the system points out the under delivery to the user with a warning
message
Note: If the under delivery is not a partial delivery but a final delivery, the "delivery
completed" indicator has to be set on the Purchase Order. In such an event ICI Soda Ash
Business function purchasing organization will set this indicator to close the Purchase
Order
3.6.12.3. Over Delivery
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In the standard SAP System, over deliveries are not allowed. In the case of an
over delivery, the system issues an error message.
If over deliveries are to be allowed, the following data can be maintained in the purchase
order:
3.6.12.3.1. Over delivery tolerance
In the purchase order, an over delivery tolerance percentage can be specified. If a
quantity of goods received is larger than the order quantity plus the over delivery
tolerance, it is not accepted by the system.
Note: ICI Soda Ash Business Function will use the Over delivery indicator to allow a
tolerance of up to 10% in over delivery of material goods.
ICI Soda Ash Business Function will have the option to set tolerance of greater than 10%
under exceptional circumstances.
3.6.12.4. Delivery Completed
The "delivery completed" indicator specifies whether a Purchase order item is
considered closed. This means that no more goods receipts are expected for this item. If
the "delivery completed" indicator is set, the open purchase order quantity becomes zero,
even if the full quantity has not been delivered.
Note: ICI Soda Ash Business Function will use the delivery completed indicator to close
open Purchase Order in the event of non-delivery of items.
Although the "delivery completed" indicator is not set, a purchase order item is still
considered closed if the full quantity has been delivered. This means that, in this case, the
"delivery completed" indicator is not required.
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3.6.12.5. Several Goods Receipt on a single Purchase Order
If you post a goods receipt with reference to a purchase order, the system converts
every selected order item into a goods receipt item. This means that exactly one goods
receipt item is created for each order item.
However, there are cases when it is necessary to create several goods receipt
items for a single order item. For example, this might be the case if the delivered material
is to be stored in several storage locations, if a partial quantity of the delivered quantity is
to be posted into quality inspection, or if the delivered quantity consists of several
batches.
To enable these cases to be handled in a single document, the Inventory
Management system provides the function of entering a subset of items as goods receipt
against the items present in the Purchase Order.
Note: In ICI Soda Ash Business function will be able to
1. Post single Goods Receipt on a single Purchase Order.
2. Post multiple Goods Receipt on a single Purchase Order.
3.6.12.6. Goods Receipt and Shelf Life Expiry Date
When you enter a goods receipt, it is possible to check the shelf life of a material.
3.6.12.6.1. Prerequisites of Shelf Life Expiry Date (SLED)
The shelf life is only checked if the following prerequisites are met. The minimum
remaining shelf life is maintained in the material master record. The minimum remaining
shelf life is the minimum number of days for which the material must keep for the goods
receipt to be accepted by the system.
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Caution: Batch Management must enable for the material for which Shelf Life
Expiration date (SLED) is required.
Note: In ICI Soda Ash Business function Shelf Life Expiry Date will be available for the
following Material types;
SAP Code for Material Types SAP Material Type Description
ERSA Stores & Spares Material
3.6.12.7. Quality Inspection Process Flow
The following flow diagram illustrates the Quality Inspection process flow at
goods receipt.
If an inspection at the time of goods receipt has been defined for the material, the
system automatically creates an inspection lot when the goods receipt is posted. Quality
Management uses this inspection lot to carry out the inspection.
Inventory Management-Integration of Quality Management
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Note: For detailed information on the Quality Management system, see the QM Blue
Print topic Inspection Process at goods receipt.
In ICI Soda Ash Business function Quality Management will be available for
imported materials and select specific materials.
3.6.12.8. Goods Receipt and Material Batches
Materials that require precise identification, for example manufactured products,
are identified and managed in stock not only according to material number, but also
according to batch number.
With batch handling, you can manage not only production lots from in-house production,
but also production lots from vendors as separate entities.
Note: In ICI Soda Ash Business function Batch Management will be available for the
following Material types;
SAP Code for Material Types SAP Material Type Description
ERSA Stores & Spares Material
3.6.13. Good Issue Functionalities
Companies usually distinguish between various types of goods issues, each of
which is handled in the SAP System as follows:
Note: The ICI Soda Ash Business function will allow the following types of goods
movement in issuance;
a) Goods Issuance by return deliveries to Vendors
b) Goods Issuance for Scrapping
c) Goods Issuance with reference
d) Transfer from one store to another
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These goods issuance movements will be monitored through material movement types.
Details follow.
3.6.13.1. Goods Issue by Return Deliveries to Vendors
Return deliveries to vendors are carried out with reference to a purchase order.
3.6.13.2. Goods issue by Scrapping
If a material is no longer usable, it must be scrapped. Scrapping of a material is entered in
the SAP System as a goods issue. The withdrawal of samples must also be entered as a
goods issue.
3.6.13.3. Goods Issue with reference to a Reservation
The SAP Inventory Management system can handle both planned goods issues and
unplanned goods issues. You plan goods issues in the SAP System with reservations.
3.6.13.4. Goods Reservation
A reservation is a request to the warehouse to keep materials ready for a goods
issue at a later date and for a certain purpose. A reservation for goods issue can be
requested by various departments for various account assignment objects (such as cost
center, production order, asset, etc.).
When a reservation is entered, the following events occur in the system:
• A reservation document, which serves as proof of the request, is created.
• In the material master record, total stock and unrestricted-use stock of the material
remain unchanged. Reserved stock is increased by the reserved quantity.
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• In MRP, available stock is reduced by the reserved quantity. This is visible in the
current stock/requirements list. The reservation causes an entry to be made in the
requirements planning file.
Note: The ICI Soda Ash Business function will use the Goods reservation function to
reserve material goods for future issuance against
1. Stock
2. Cost center
3. Asset
4. Maintenance Work Order
3.6.13.5. Goods Reservation Process Flow
The following figure shows the process flow of a material reservation.
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A reservation document consists of a header and at least one item. The header contains
general data about the reservation (creator, movement type, account assignment). The
items describe individual planned movements (material, quantity, requirement date).
3.6.13.6. Authorizations (User Roles and Profiles)
Business Process IZ NA SA GRM MAR MTC TH QM MB TIK BB AKJ RH IA RTA
Goods Receipt / Issue Maintenance*
Stores and Spares, Raw Materials & Scrap
Material  
Finished Goods Material   
Raw Materials & Packing Material   
Lab Materials 
Stationary Material  
Admin, Wheat and Hospital Supplies Materials  
IT Material  
Duplication of roles for Backup reasons Purchasing Department
Engg. Stores Accounts and Stores Inventory
Raw Materials and Other Material Types
Note: Material Type wise restriction
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3.6.13.7. Authorizations (SAP Login, User Name and Respective Area):
USERS LEGEND
User Initials SAP User Area and Function
IZ Iqleem Zahur
Purchasing Department
Finished Goods Stores Warehouse
NA Naeem Ahmed
SA Shahid abbas
MAC Ch. M. Aslam
ZSH Sh. M. Zahid
GRM Ghulam Rabanni Malik
Stores and Spares Warehouse, Raw Material and Scrap Yard
MAR Mohd. Arshad Rana
CID Ch. Imam Din
TR Raja Tahir Abdullah
IB Imran Bashir
CMA Ch. Mushtaq Ahmed
Finance Department
SMR S. M. Rizwan
MTC M. Taufeeq Cheema
Raw and Packing Materials
TH Tabsheer Hussain
QM Qazi Munir
RH Raaghib Hussain
MB M. Bilal Laboratory Materials
AKJ
RH
Aurangzeb K Jadoon
Raghib Hussain
Admin, Wheat and Hospital Supplies Materials
TIK
BB
Tanveer Iqbal Khan
Bashir Bhatti
Stationary Store
IA Iftikhar Ahmad IT Materials
RTA Raja Tariq Ashraf
74

Chapter # 4
RESULTS & DISCUSSION
75

4.1. POINTS OF DIFFERENCES REPORT
4.1.1. Physical Inventory Related
there is no change in the physical inventory management system due to change in
inventory management software but, it is suspected that after some time some changes
are take place in the physical inventory management system.
4.1.2. New Software Points
It provides the integration facility i.e. one matter of ICI Soda Ash Khewra
inventory can be handle from ICI polyester plant of Karachi.
Now it is easy to report a thing from one unit of ICI to another. It is like provides intranet
facility within the ICI Pakistan group.
4.1.3. Interviews Reviews Difference
There are following points of differentiation inn between the old and new
inventory management systems:
• There is lack of facilitations in the MAXIMO inventory management system and
also the description about the job allocation is differing due to which some
problems are creating.
• The SAP is difficult to use without authorization and proper training courses.
• Calculation work and intellectual review in the SAP inventory management
system is easier then MAXIMO.
4.2. ANALYSES
I am using SWOT analyses for the comparative study of inventory management
and control system. There can be taken the SWOT analyses of both the inventory
76

management systems i.e. MAXIMO and SAP. It shows all the things which are taken
under consideration while purchasing any inventory management and control software.
There are clearly subscribed the Strengths, Weaknesses, Opportunities, and Threats of
both the inventory management systems. One by one I take the study of both the systems;
first I take the SWOT analyses of MAXIMO, which is the previous inventory
management system.
4.2.1. SWOT analyses of MAXIMO
4.2.1.1. Strengths:
• In ICI Soda Ash MAXIMO is working as inventory management software since
last 5-6 years, that’s why all the employees and managers are understanding its
functions easily and use-to with this system.
• It is less expensive then SAP inventory management software.
• There is flexibility in the functions of MAXIMO inventory management system.
• Users are more comfortable while using the functions of MAXIMO due to lesser
variables involvement.
• It provides all functions of inventory management and control system used in
manufacturing organizations, and also it cannot damage for a single time in the
period of 5-6 years.
4.2.1.2. Weaknesses:
There are following weaknesses of MAXIMO inventory management and control
System
• The integration facility is not there in the MAXIMO due to which reporting
work is more and process is time taking.
• There is lack of security of data in the MAXIMO.
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4.2.1.3. Opportunities:
• It provides the upgrade facility and expanding in the functionalities is also
possible.
• It is saleable at any time and has less expensive then SAP.
4.2.1.4. Threats:
There are following threats in the MAXIMO inventory management system:
• In case of increase in operation of organization it may not be much progressive
as per the need of new technology requirements.
• If any other organization came with new explanatory software there may be
chance of less competitiveness.
• New world of W.T.O. came in near future due to which may be ICI Soda Ash
needs more qualitative advantages.
4.2.2. SWOT analyses of SAP inventory management system
As per SAP inventory management system is concern, it is newly installed in ICI Soda
Ash and has following Strengths, Weaknesses, Opportunities and Threats.
4.2.2.1. Strengths:
• It provides the facility of integration between activities and network. Now all the
group of ICI Pakistan is now directly interlinked.
• It has provided more facilities and functions of inventory management system.
• It provides more secrecy in its functions and data as compared to MAXIMO
inventory management system.
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4.2.2.2. Weaknesses:
Actually SAP is newly came into Pakistan that why, its some strengths are its
weaknesses. These are as follows:
• There is not much operator of SAP in Pakistan.
• The employees are taking sometime in understanding the functions and
facilitations of SAP inventory management system.
4.2.2.3. Opportunities:
• It is totally a new invention in Pakistan and its positive and good use can make
value edition in the goodwill of ICI Soda Ash, and also meet world wide quality
standards.
• It is good time for the employees of ICI Pakistan to make knowledge of a
valuable inventory management system.
4.2.2.4. Threats:
• The biggest threat is of the failure of the SAP inventory management system, as
its installation is the result of long term planning.
• May be it will not be that much productive as per its estimations.
• Its functions are more then MAXIMO inventory management system and need
some specialization for its better use in organization.
• May be employees are not feeling much comfortable in use of SAP inventory
management system.
4.2.3. On the Bases of Intellectual Review
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• Installation of SAP is the part of long term planning.
• The point of W.T.O policies are under consideration in installation of SAP
inventory management system.
4.2.4. On the Bases of Interviews
I analyze some points on the bases of interview questions which are as follows:
Ans.1
The main difference in both the inventory management system is the point of integration.
SAP is providing the facility of integration rather MAXIMO does not have this facility.
Ans.2
There is no expiration date any of both inventory management systems i.e. SAP and
MAXIMO but, when new softwares are came into market; there is requirement of change
and improvement in system.
MAXIMO is working in ICI Soda Ash since last 5-6 years and there is no defect seen in
the working duration.
As, SAP is newly installed inventory management system, it has also unlimited life but, it
is more productive then MAXIMO in terms of its features, functions and security system.
Ans.3
With the installation of new inventory management system the ICI Soda Ash is bit more
productive in sense of security, errors and omissions. Also, it makes the work quicker and
timely reporting are easily made in time.
Ans.4
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It is the timely requirement and may be due to long term planning as, there is gradually
increase in the competition.
Ans.5
Yes, there are policies of W.T.O relates to quality management are also under
consideration while installation of new inventory software.
I don’t comfortably say, it is true MAXIMO does not meet the requirements of W.T.O
quality policy but this is sure that it is under consideration.
Ans.6
No, it’s not true that MAXIMO does not meet the requirements of ICI Soda Ash. It is
rightly said that, its processing is slow as compared to SAP inventory management
system otherwise it provides almost all the functions which provides SAP except
integration.
Ans.7
One cannot say that MAXIMO is easier or SAP because, the employees are MAXIMO
since last 5-6 years and now they are use to and now more comfortable to use MAXIMO
rather SAP inventory management system.
SAP is more explanatory inventory management system but, need some time to
understand its functionalities.
There is need of coaching classes of SAP in ICI Soda Ash for the better understanding of
new inventory management system.
Ans.8
81

Yes, there are different criteria are used for the selection of new inventory software i.e.
SAP. Main emphases on the quality and security.
The basic reason of selecting SAP inventory management system is its integration
facility.
Ans.9
MAXIMO is easier because, it has less functions and easy to understand rather SAP is
also not so difficult but, as it has more functions and newly introduce in Pakistan its start
may feel difficult.
Ans.10
Yes, it is necessary to work parallel in both the inventory management system for a year
to avoid threats of the system and control weaknesses of the system.
As, at any time if SAP is made some trouble, the data maintained in MAXIMO overcome
many of threats.
4.2.5. On the Bases of New Inventions and Technology Requirements
The main difference in the new technology is the networking difference. The new
inventory management system is providing the intranet facility with in all branches of ICI
Pakistan, which is the requirement of future business and new technology requirement.
4.2.6. On the Bases of Convenience
As such, there is no big difference in between the inventory management system.
Regular employees are more convenient in use of MAXIMO rather SAP.
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It is expected that SAP is more easier as, it has elaborate its all features due to
which if any problem occur it will be solved with in seconds.
4.2.7. On the Bases of Security
The SAP inventory management system is providing more secrecy in its data and
functionalities which is the keen desire of good organizations.
The provision of authorization is more in SAP.
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Chapter # 5
CONCLUSION & RECOMMENDATIONS
84

5.1. CONCLUSION
After the study of inventory management in ICI soda ash I conclude that in the
ICI soda ash the inventory management & control system is very easy because they can
handle inventory of about Rs.250 million at a time and more than 33,000 items are
included in that but, there is no problem in working.
Early when the manual system is used, the work done in weeks but now the same
work will be done in mints just due to the improved technology and its use in the
company. First they can train their employees and than introducing technology and with
some proper planning downsizing implement.
Now in year 2003-2004 there is new software installed which makes the work
more easy, in the other Branches of ICI the SAP is already installed. In ICI the employees
are already trained for the working on SAP.
In the ICI soda ash I see that this company shows double profit in account as
compared to their overall cost. For inventory control there is a proper eye on the different
vendors & whenever they find new vendor they add.
I also conclude that the inventory management system in ICI is very easy as the
policy of training of the employees is very good, due to which ICI avail the opportunity
of installing new software. They emphasis more on the holding cost rather than stock out
position because they have wide area for storing inventory.
Computer network technology concerns the integration of computers and
telecommunication networks, creating a world-wide web of computer networks. This
enables new ways of information processing and of organizing business, as optimization
can shift towards functional effectiveness, and business networks can be reconfigured
with the help of electronic integration. Important issues in computer network technology
are distributed system technology and object-oriented system technology.
85

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