Business Process Reengineering of Inventory System

Business Process Reengineering

As we all know previously before the new system, business process re-engineering had been implemented, the company only use spreadsheet and limited storage database in recording the accounting transaction. Some of the process were done by manually. So it leads to ineffective recording and documentation and lastly affected the standard operating procedure of every department. In order to get the first-hand information to do improvement of the system, traditional and modern data gathering had been used. Traditional data gathering such as interviews, observation and questionnaire are done by the committee of improvement system. They will conduct an interview with every department managers to understand the current condition of the old system and how it can be affected the operation of their department. However it can be time consuming if the interviewers are busy to entertain us, so sometimes the information can be obtained from a larger group by conducting a questionnaire, surveys or through observation of their operation procedure. For questionnaire, the committee will ask the question based on each function. For example, inventory department will be required to answer “what is the inventory policy that inventory department is using”, purchasing department will required to answer “do purchasing department cross-check on the inventory level before purchasing” and etc. on the surveys so that the improvement system committee can have a clearer picture on the old system and procedure of each function.

Although traditional technique can obtain lots of information but it somehow still lacking of details and solutions are needed to do the improvement of system. So, Business Process Reengineering (BPR), one of the modern data gathering technique can be used to improve the system and it is an analysis and redesign of workflows within and between the organization in order to optimise the end process and automate non-value-added tasks. An organization will find out the needs of its customers and users so that it can smoothening the business process through questionable assumptions. For traditional data gathering technique, we get from questionnaire, observation and interview. While this time BPR will focus on the organization’s business process which concerning the steps and procedures to create products and provide services to fulfil the needs of customers and markets. Furthermore, BPR will usually fragmented into sub-processes and tasks carried out by functional areas of the organization.

BPR can be applied to our project as it can improve the inventory system. The project committee had designed a framework regarding business process of each function that engage with inventory system. The department involved to improve the inventory system were purchasing department, accounting department, sales department and logistic department. During the planning phase, we had identified there are no linkage between inventory department with sales, accounting and logistic department. That is why the problems of 25% inventories no movement, excess expired inventory stored in warehouse and incomplete information on financial statements occurred. So, BPR had improvise the inventory system by linking the databases of inventory department to sales, purchase and accounting department so that sales, purchase and accounting department can cross-check the current inventory level. At the same time, a hardcopy of stock inventory level report will be issued and sent to accounting department twice a month for opening stock and closing stock. A purchasing requirement report will be sent to purchasing department when inventory department realize there is shortage of stock. Meanwhile, if there is no damage stock received, goods receiving report will be issued and sent to purchase department and stock return report will be sent to purchasing department if there is damage stock. Both of the reports in copy will be sent to accounting department as acknowledgement and documentation. Besides, a copy of delivery note will be sent to sales department as an acknowledgement when stock is releasing to logistic department. The project committee believed that the communication flow will be better by doing proper documentation and data entry system.