Reduction of Inventory Inaccuracy through Process Improvement and Information System Development of Xylem Water System International Inc., Calamba, Laguna, Philippines

Purpose - The presence of inaccurate inventory records in an inventory system of a manufacturing company can result to production interruptions, stock-out of parts, and unnecessary expediting of components. This study attempted to fill in the gap on detecting the causes of inventory inaccuracy and how each cause can be solved through process improvement and information system development solutions. Design/Methodology/Approach - The study first identified the business processes, along with their key requirements and critical processes, that involved handling inventory through a SIPOC analysis. Root cause analysis was used to pinpoint the different failure modes of each critical process and classify which cause of inventory inaccuracy can be solved within the study scope. The poka-yoke analysis was used to spot the different system requirements for each of the identified cause of inventory inaccuracy while being consistent with their key requirements to ensure failproof solutions. The proposed information system was developed along with the concepts bound within inventory management and control and the obtained system requirements. The proposed information system was tested through feasibility and simulation tests to determine its current quality level and projected improvement in inventory accuracy. Findings - Results from the process and root cause analysis identified the causes of inventory inaccuracy in the company to come from reasons of system incapability, product nature, process restrictions and current process practices. The proposed information system provides data recording and collection capabilities, scheduling capabilities, summary and overview of warehouse locations, monitoring and updates of inventory, and customizable location entities. The proposed information system will be integrated with the current inventory system of the company by replacing and adding some of the current system’s functions. Its overall single usability metric score from 10 participants obtained an average 2.7324 process sigma and an average of 85.97% quality level. From the simulation tests, the projected increase in inventory accuracy is 45%. Research Implications - By replacing some of the current system’s functions, the proposed information system was able to add more critical information in the inventory records and capability for the personnel involved, which is projected to increase inventory accuracy and allow the personnel to manage and monitor inventory at a higher level.