SUPPLY CHAIN MANAGEMENT IN A PACKING COMPANY
ETTYSHA BINTI MOHD SAID
A project report submitted in partial fulfillment of the
requirements for the award of the degree of
Master of Science (Information Technology – Management)
Faculty of Computer Science & Information Technology
Universiti Teknologi Malaysia
JUNE 2006
“We hereby declare that we have read this thesis and in our opinion this thesis is
sufficient in terms of scope and quality for the award of the degree of Master of
Science (Information Technology – Management)”
Signature : ……………………………
Name of Supervisor I : ……………………………
Date : ……………………………
Signature : ……………………………
Name of Supervisor II : ……………………………
Date : ……………………………
I declare that this thesis entitled Supply Chain Management in a Packing Company is
the result of my own research except as cited in the references. The thesis has not
been accepted for any degree and is not concurrently submitted in candidature of any
other degree.
Signature : ……………………………
Name : ……………………………
Date : ……………………………
ACKNOWLEDGEMENT
I would like to express my gratitude to all those who gave me the possibility
to complete this thesis. I want to thank Kian Joo Canpack (Shah Alam) Sdn. Bhd.
for giving me permission to commence this thesis in the first instance, to do the
necessary research work and to use the data. I have furthermore to thank the Deputy
General Manager of the company, Mr. Vincent Oh who gave and confirmed this
permission and encouraged me to go ahead with my thesis.
I am deeply indebted to my supervisors Assoc. Prof. Wardah binti Zainal
Abidin and Pn. Suzana Abidin whose help, stimulating suggestion and
encouragement helped me in all the time of research for and writing this thesis.
My colleagues, friends supported me in my research work. I also want to
thank Mr. Mohamed Fazil bin Abdul Salam who’s looked closely at the final version
of the thesis, correcting and offering suggestion for improvement.
Especially, I would like to give my special thanks to my family whose patient
love enabled me to complete this work.
ABSTRAK
Persaingan yang semakin sengit antara pengeluar memerlukan pihak
pengurusan mengambil cabaran untuk melakukan transformasi. Untuk terus bertahan
dalam industri, pengeluar mestilah berkeupayaan memberi produk yang berkualiti,
pada masa yang ditetapkan dan kuantiti yang diperlukan kepada pelanggan atau
penggunanya. Untuk mencapai matlamat itu, pengeluar tidak sahaja bergantung
kepada kekukuhan kewangan tetapi pengetahuan dari process perniagaan yang
teratur perlu dijadikan sebagai faktor pegangan utama perniagaan. Berdasarkan
keperluan tersebut, semakin banyak pengeluar menyedari kepentingan untuk
mengurus dan memanfaatkan maklumat yang mereka miliki untuk menjadikan
mereka lebih berdaya saing di dalam industri tersebut. Supply Chain Management
System (SCM) yang dibangunkan dari penyelidikan ini akan menyelesaikan masalah
yang dihadapi oleh pihak pengurusan Kian Joo Canpack (Shah Alam) Sdn. Bhd.
Sistem ini mengintegrasikan setiap bahagian dalam syarikat ini. Sistem ini
berfungsi sebagai perantaraan untuk mengurus pesanan pembelian dari pelanggan,
membeli bahan-bahan untuk pengeluaran dan keluar masuk barangan untuk
digunakan atau diedarkan kepada pelanggan. Selain itu, sistem ini akan menjana
laporan setiap bahagian operasi untuk dianalisa oleh pihak pengurusan. Maklumat
yang dijana daripada sistem ini akan dijadikan sebagai pengetahuan untuk dijadikan
asas untuk mengukuhkan lagi prestasi syarikat.
TABLE OF CONTENTS
CHAPTER
TITLE PAGE
1 PROJECT OVERVIEW
1
1.1
Introduction 1
1.2
Background of the Problem 3
1.3
Problem Statement 8
1.4
Project Objective 9
1.5
Project Scope 9
1.6
Importance of Project 10
1.7
Chapter Summary 10
2 LITERATURE REVIEW
11
2.1
Introduction 11
2.2
Definition of Supply Chain (SC) and12
Supply Chain Management (SCM)
2.2.1
Supply Chain (SC) 12
2.2.2
Supply Chain Management 12
(SCM)
2.3
Background of Supply Chain14
Management (SCM)
2.3.1
History of SCM
14
2.3.2
What is SCM?
15
2.3.3
SCM User
16
2.3.4
SCM Strategy
16
` 2.3.5 The Advantages of SCM 17
2.3.6
Logistics Concept
18
2.3.7
The Value Chain
19
2.4
The Organisation under Research 20
2.4.1
Current Scenario in the20
Organisation
2.5
Current Trends in Employing SCM 22
System
2.6
Chapter Summary 26
3 METHDOLOGY
27
3.1
Introduction 28
3.2
Project Approach 28
3.2.1
Data Collection 28
3.2.1.1
Offline Resources 29
3.2.1.2
Online Resources 29
3.2.2
Requirement Capturing 29
3.2.2.1
Background Information 30
Gathering
3.2.2.2
Interview 30
3.2.3
Data Analysis 30
3.3
System Development Methodology 31
3.3.1
Requirement Solicitation and 32
Verification
3.3.2
Requirement Analysis 32
3.3.3
System Design 32
3.3.4
System Construction 33
3.3.5
Testing 33
3.3.6
Implementation 34
3.4
Project Schedule 34
3.5
Chapter Summary
4 SYSTEM DESIGN
35
4.1
Introduction 35
4.2
Organizational Analysis 36
4.2.1
Organization Structure 37
4.3
Current Business Process and Data38
Model
4.3.1
Context Diagram and Data Flow 38
Diagram
4.3.2
Entity Relationship Diagram 41
4.3.3
Analysis of Current Situation 42
4.4
User Requirement 43
4.4.1
Sales Module 43
4.4.2
Purchase Order Module 43
4.4.3
Inventory Module 43
4.5
Conceptual Design 44
4.5.1
Business process and Data Model 44
4.5.2
System Architecture 47
4.6
Physical Design 46
4.6.1
Database Design 49
4.6.2
Program (Structure) Chart 49
4.6.3
Interface Chart 52
4.6.4
Detailed Modules/ Features 53
4.7
Hardware Requirement 54
4.8
Test Plan 54
4.9
Chapter Summary 55
5 IMPLEMENTATION AND TESTING 56
5.1
Introduction 56
5.2
Coding Approach 57
5.2.1
Sales Module 57
5.2.2
Inventory Module 58
5.2.3
Delivery Transaction 58
5.3
Test Result / System Evaluation 59
5.4
User Manual for Administrator 62
5.4.1
Sales Module 65
5.4.2
Purchasing Module 66
5.4.3
Inventory Module 67
5.4.4 Report 69
5.5 Chapter Summary 70
6 ORGANIZATIONAL STRATEGY 71
6.1 Introduction 71
6.2 Roll-Out Strategy 71
6.3 Change Management 73
6.4 Data Migration 73
6.5 Business Continuity Plan (BCP) 74
6.6 Benefits of the System 74
6.7 Chapter Summary 75
7 DISCUSSION AND CONCLUSION 76
7.1 Achievement 76
7.2 Constraint and Challenges 77
7.3 Aspiration 77
7.4 Summary 77
REFERENCE 79
APPENDICES 80 - 89
LIST OF FIGURES
FIGURE NO.
TITLE PAGE
2.1 Supply Chain Strategies
17
2.2 Supply Chain Management
18
2.3 The Value Chain
19
2.4 Filing System in KJCP (S.A)
21
2.5 PeopleSoft SCM Solution
24
2.6
PeopleSoft Pure Internet Architecture 25
3.1
Overview of Methodology Technique 28
3.2 Waterfall Model Structure
31
4.1 Organization Structure of KJCP
37
4.2
Context diagram for current process 38
4.3
Decomposition diagram for Current Process 40
4.4
Level-1 Data Flow Diagram for current 41
Process
4.5
Entity Relationship Diagram for current 42
processes.
4.6
SCM System Overview 44
4.7
Context Diagram for SCM system 45
4.8
Level 1 DFD Diagram for SCM System 45
4.9
Decomposition Diagram for SCM System 46
4.10
Entity Relationship Diagram for Conceptual 47
Design
4.11
System Architecture for SCM System 48
4.12
The structure chart for Administrator login 50
4.13
The structure chart for User login 51
4.14
SCM Interface Chart 52
5.1 Main Menu 62
5.2 Company Information Page 63
5.3 Employee Information Screen 63
5.4 Customer Information page 64
5.5 Supplier Information page 64
5.6 Main Menu of SCM System 65
5.7 Create and Delete Customer Order 65
5.8 Purchase Order page 66
5.9 Purchase Order Report 67
5.10 Inventory Module sub-menu 68
5.11 Stock Movement Record 68
5.12 Add or Delete Product page 69
5.13 View Reports sub-menu 69
LIST OF TABLES
TABLE NO. TITLE PAGE
2.1 SCM Definition 13
2.2 Current Trend in SCM 22
2.3 Benefits of PeopleSoft Internet Architecture 25
5.1 Testing Result 60
LIST OF APPENDICES
APPENDIX TITLE PAGE
A Project Timeline 80
B Purchase Order Form 89
CHAPTER 1
PROJECT OVERVIEW
1.1 Introduction
Kian Joo Canpack (Shah Alam) Sdn. Bhd. (KJCP)was formed on the 26 of
August 2004. The company is situated in the city of Shah Alam. KJCP is a
subsidiary of the Kian Joo Group Berhad. Kian Joo Group Berhad is the largest
producer of packaging material in South-East Asia. Although producing packaging
material remains the main business of the group, it has also decided to venture into
the business of contract packing. Contract packing means that providing the service
of packing the products of clients who do not have or do not want to set up their own
packing line. To fulfil this segment of the market, KJ group has decided to set up
two companies dedicated to providing such a service. These companies are Kian Joo
Canpack (Nilai) Sdn. Bhd., which deals in packing soft drinks, and Kian Joo
Canpack (Shah Alam) Sdn. Bhd., which deals in contract packing for milk powder.
The aim of KJCP is to become a one-stop centre for the companies that
produce milk powder. This means that the company will source all the necessary
packing materials, and if necessary, raw materials (milk powder) to fulfil customers’
orders. A feature of the company is the existence of a microbiology lab, which
assists in the company’s task of ensuring the highest quality of all its products.
KJCP is the sole packer for Dutch Lady Milk Industries Sdn. Bhd. (DLMI).
They pack milk powder on behalf of DLMI for the local market as well as for the
Hong Kong, China and Middle East markets.
To fulfil the needs of its customers, KJCP utilises sources for their raw
materials from other subsidiaries within the Kian Joo Group. These other companies
thus act as the suppliers for KJCP. Among the companies that supply the raw
materials are Federal Metal printing Sdn. Bhd., Multi-Pet Sdn. Bhd., Box-Pak (M)
Bhd. and Kian Joo Can Factory Sdn. Bhd., which is actually the Headquarters of the
Kian Joo Group.
The day-to-day operation of KJCP requires good coordination of data and
information starting from the supplier right up to the customer. This process is
extremely crucial to all profit-seeking organizations. SCM refers to the analysis of
the effort to improve a company's processes for product and service design,
purchasing, invoicing, inventory management, distribution, customer satisfaction and
other elements of the supply chain. SCM usually refers to an effort to redesign
supply chain processes in order to achieve streamlining. Supply Chain Management
is a network of facilities that procure raw material, transform them into intermediate
goods and then into the final product. The final product is then delivered to the
customer through a distribution system. SCM is the collective responsibility for
procurement, manufacturing, planning and delivery.
Apart from good manufacturing practices within KJCP itself, the ability to
have the right product in right quantities at the right place and moment at minimal
cost is also very desirable.
All the information must be managed correctly so that it would not jeopardize
the other aspects of the business environment such as sales, marketing and such. By
keeping supply chain information that is efficiently managed and easily revised, the
organization can plan their business according to sales trends and other market
factors.
1.2 Background of the Problem
The coordinated set of techniques is to plan and execute all steps in the global
network used to acquire raw materials from vendors, transform them into finished
goods, and deliver both goods and services to customers. It includes chain-wide
information sharing, planning, resource synchronization and global performance
measurements. Getting and keeping supply chain information is an essential task in
any organization. In any manufacturing organization, the process flow involved,
from acquiring raw materials right up to producing the finished goods, planning,
monitoring and control are the main tasks involved. This is true even for KJCP. In
manual, out-dated systems, such tasks are very hard to implement, especially in large
industries. As long as an organization has suppliers and customers, information that
is reliable, up-to-date and easy to maintain is of utmost importance. By using
conventional system means that the organization keeps hard copies that detail all the
information needed by management. However this is definitely not the best way to
keep all the information because it is difficult to revise.
In this day and age, the business environment is such that what goes in and
out of an organization is done at a very fast pace. Therefore, using paper-based
solution to keep track of this all would prove to be impractical to say the least.
Using different systems in each department will make the data and
information difficult to coordinate and produce the expected result. This will delay
the business process and slow feedback. Besides that, data integrity is not
guaranteed and therefore, it is subject to unwanted manipulations and fraud.
Cost related to storage and extra staff required to manage all the paper based
process are also incurred when using conventional methods. The large number of
staff that is required to manage the manuals increases the tendency for mistake to
occur. There is a possibility that employees may inadvertently skip entering crucial
data.
Among the problems that may plague KJCP as a result of using out-dated
systems include:
o
Running out of raw materials
....When demand increases, production will also increase.
However, this positive situation can quickly turn negative if
the raw materials needed for production are inadequate, or
worse still, out of stock. A poor system being used may result
in this problem arising.
o
Lost orders
....When there is no proper flow of data, there could be cases
where orders made were inexplicably lost in transition. When
this happens, lost orders will translate into lost sales.
o
Unfulfilled orders
....Miscommunication as a result of using poor systems will also
lead to the problem of unfulfilled orders. This means that
clients are unable to receive their orders on-time-in-full
(OTIF). This could lead to dissatisfied and angry customers.
o
Inability to trace movement of goods, order and product distribution.
....When using a manual and non-integrated system of managing
process flows, the movements of goods within the
organization is very hard to trace. Often, it includes checking
all the stops that the goods make during the process, starting as
raw materials all the way to it becoming finished goods. This
could prove to be time-consuming and tedious. In the business
world where time is equal to money, this sort of practice is
highly undesirable.
o
Difficulty in sorting information
....If a manual system, such as recording tasks in books, or even
using spreadsheets, it is difficult to present the information in a
variety of views. Multiple views that can be accessed in an
instant are very important so that the most relevant and critical
information are always available at a moment’s notice.
o
Difficulty in monitoring over-supply and outstanding PO/DO
....Another common problem is the absence of triggers and
warnings that tell the user about the existence of problems and
potential problems. Using non-integrated systems means that
critical situations that occur at different parts of the
organization would not be known to the rest of the
organization. An example would be, the Production side needs
to increase it output but it does not realize that raw materials
are not in stock.
o
Difficulty in checking the status of items
....When a batch of raw materials is received, it is then put
through the whole process of turning it into finished goods.
However, should any person wants to view the status of the
materials; he would need to check every stop that the batch
makes in the process flow. This is again, a very time-
consuming task. Only an integrated system allows fast access
to this information.
o
Inability in checking supplier performance.
....Supplier performance is a critical data that is used to evaluate
the competence of suppliers. In manual systems, it would be
almost impossible to keep a running analysis of each and
every supplier an organization has. This inability would make
the organization vulnerable to outside forces that could
ultimately cause lost revenue.
o
Reports and analyses have to be generated manually
....Producing reports and analyses are an inevitable part of a
business. This task is highly tedious and time-consuming if the
raw data that the organization has are all recorded in manual
and/or non-integrated systems.
o
Reports produced are often times inaccurate
....The absence of checking tools in manual systems can also lead
to mistakes and inaccuracies being produced in reports and
analyses.
o
Accountability and responsibility may not be always available.
....Maintaining a manual/non-integrated system leaves the
organization with a difficult task of tracing the individual(s)
that are involved in the whole process flow of manufacturing.
As a result, improper and even fraudulent practices will
remain unchecked. Again, this could mean huge losses to the
organization.
In the ever changing global environment of the business world, risks abound
and it greatly affects the decision making processes of the business management.
This uncertainty has led to a need for higher reliability and flexibility within the
production systems and the planning and control systems in the supply chain.
Reducing these uncertainties is achieved by understanding the root causes and how
they interact with each other. Change in markets, products, technology, and
competitors are occurring at an increasingly rapid pace. As a result, managers must
make decisions on shorter notice, with less information, and with higher penalty
costs. Therefore, a reliable yet flexible system is fundamentally needed to assist the
management in making decisions that might prove to be the make-or-break decision
for their companies. In the SCM, they have found the answer.
1.3 Problem Statement
The efficiency of an organization to keep track and maintain an up-to-date
and reliable supply chain data is undermined and therefore an IT-based solution is
needed to complete these tasks and increase efficiency.
1.4 Project Objectives
The project objectives are as follows:
1.
To produce a system that would be capable in helping the management to
control critical processes in the business. The system would be able to
assist in the pick/pack/ship cycle of the Supply Chain Management
System.
2. To produce documentation that would show the details on how to use
the SCM system and show how it would improve the task of sales,
purchasing, inventory and transportation.
1.5 Project Scope
The project will focus on the following:
..
The research data and information will be gathered from Kian Joo
Canpack (Shah Alam) Sdn. Bhd.
..
The study is based only on the flow of sales, production, inventory
and transportation.
..
Data collection, interview and data analysis are used as methodology.
..
System development methodology recommended is Waterfall Model.
1.6 Importance of Project
The importances of the project are:
1. To eliminate the paper-based process and control over processes so
that all the problems that usually occur would be solved or minimized. The
information will be coordinate to produce expected result.
2. To assist the management in extracting and producing more accurate
data and in shorter period of time.
3. To help management in intelligent decision making by providing
critical data, information and analyses.
1.7 Chapter Summary
This chapter introduces the project and discusses the problems to be solved in
detail. The purpose of the chapter is to provide a deeper understanding of the project
objectives and scope.
CHAPTER 2
LITERATURE REVIEW
2.1
Introduction
This chapter focuses on the detail and comprehensive understanding of the
topic. The main contributions of this chapter are:
1.
The definition of Supply Chain (SC) and Supply Chain Management
(SCM).
2.
The background of the SCM.
3.
The current trend of SCM.
In this chapter, examining and analysis on a few case studies involving
several organizations from various industries are conducted and reported. Among the
aspects that will come under scrutiny include the methodologies used in producing
the SCM system, the hardware and software specifications, the features that are
incorporated in the systems and the immediate benefits gained by the organizations
using the system.
This section will also briefly introduce the organizations involved in this
research.
2.2 Definition of Supply Chain (SC) and Supply Chain Management (SCM)
2.2.1 Supply Chain (SC)
Definition of Supply Chain is the sequence of steps, often done in different
firms and/or locations, needed to produce a final good from primary factors, starting
with processing of raw materials, continuing with production of perhaps a series of
intermediate inputs, and ending with final assembly and distribution. SC can also be
define as the progression of businesses involved in the supply and purchase of
materials and goods from raw materials to final product.
SC uncertainty refers to decision making situations in the SC in which the
decision-maker lacks effective control actions or is unable to accurately predict the
impact of possible control actions on system behaviour because of a lack of:
• information (or understanding) of the environment or current SC state;
• a consistent model of the SC presenting the relationships between SC
variables and SC performance indicators.
Supply chain includes all the processes that put the product in the hand of
end-user. This includes numerous transactions involving physical movement,
exchange of information, and the flow of money. Supply chain normally designed for
strategic advantage. Continuous improvement for both product and supply chain
deter competitors. (Vorst, 2000)
2.2.2 Supply Chain Management (SCM)
Definition of Supply Chain Management is the integrated planning, co-ordination
and control of all logistical business processes and activities in the SC to deliver
superior consumer value at less cost to the SC as a whole whilst satisfying the
requirements of other stakeholders in the SC. The development and integration of
people and technological resources are critical to successful supply chain integration.
(Vorst, 2000)
Table 2.1 SCM Definition
Resource Definition
Rune Teigen, 1997 A supply chain is a network of facilities and distribution
options that performs the functions of procurement of
materials, transformation of these materials into
intermediate and finished products, and the distribution
of these finished products to customers.
Rusell Kay, 2001 A supply chain is a network of suppliers, factories,
warehouses, distribution centers and retailers, through
which raw materials are acquired, transformed,
produced and delivered to the customer
www.ediuniversity.com The delivery of customer and economic value through
integrated management of the flow of physical goods
and associated information, from raw materials sourcing
to delivery of finished products to consumers.
www.umich.edu The design and management of seamless, value-added
processes across organizational boundaries to meet the
real needs of the end customer. The development and
integration of people and technological resources are
critical to successful supply chain integration.
vtm.com A broader concept than logistics; extends the concept of
logistics beyond the firm to all firms in the supply chain,
including vendors, customers, carriers, facilitators, and
channel intermediaries.
www.blinco.com The management and control of all materials, funds, and
related information in the logistics process from the
acquisition of raw materials to the delivery of finished
products to the end user.
2.3 Background of Supply Chain Management (SCM)
2.3.1 History of SCM
According to the Techie Ariba Newsgroup
(http://www.techie.techieindex.com), the SCM began in the era of post-World War
II. Supply chain was a set of linear, individualized processes that linked
manufacturers, warehouses, wholesalers, retailers and consumers together in the
form of a human/paper chain. "People and paper physically connected all of the tiers
of the chain together," which often created miscommunication between the front- and
back-end processes. The synching of procurement, demand planning and forecasting,
inventory management, shipping and tracking was far from a definitive science.
However, as manufacturing and economic growth flourished during the 1950s, there
developed a greater interest in the need for SCM.
The 1960s saw the birth of the first inventory management software systems,
which were typically customized, to aid inventory control in the manufacturing
sector. In the 1970s, SCM innovations brought forth Material Requirements Planning
(MRP) – a system that phases out the release of production and purchase orders to
ensure that the flow of raw materials and in-process inventories matches the
manufacturer’s production schedules for finished products. By the 1980s,
Manufacturing Resources Planning (MRP-II) was developed, bringing with it
systems that could be used for planning all manufacturing resources, including those
related to operational planning, financial planning, business planning, capacity
requirements planning, and master production scheduling. It was MRP-II’s extension
into the business enterprise that evolved into an entirely new information technology
sector: Enterprise Resource Planning, or ERP.
In 1988, SCM took a significant leap of its own. Sanjiv Sidhu, founder of
Dallas, Texas-based i2 Technologies and a former artificial intelligence expert with
Texas Instruments, developed a new breed of software that was based upon the
"theory of constraints." Sidhu’s product would allow a "company’s factories (to)
communicate internally, with each other, and with headquarters to improve the flow
of materials and orders." By 1997, this software had become Internet-enabled. Other
firms have since developed expertise in either specific industries, such as consumer
goods and process industries, or very specific niches of the supply chain, such as
execution and tracking.
SCM has taken on additional names, such as business-to-business or B2B. Its
processes and capabilities have also allowed for more focused, "one-on-one"
extensions – namely exchanges. An exchange is a two-sided marketplace where
buyers and suppliers negotiate prices and fulfill online transactions between one
another and are either private or public. For example, a private exchange would
involve Company A selling widgets to Company B, meeting together on a secure
web site to place and fulfill orders exclusively and by invitation only; a public
exchange is more of an auction or bidding place for pre-qualified subscribers or
members.
2.3.2 What is SCM?
SCM is a business solution that ensures the chain leading from supplier to the
manufacturer all the way to the user is managed and run as efficiently as possible.
Supply chain management is an integral business approach. It covers all fundamental
issues related to the supply chain such as functional strategies, organisational
structure, decision making, resource management, support functions, systems and
procedures. Supply chain thinking has untapped potential for maintaining a
competitive position or moving a company from an unfavourable to a more
advantageous position.
According to cio.com website, there are five basic components for supply
chain management. The components are plan, source, make, deliver and return. SCM
ensure that order fulfillment enables the manufacturers to optimise sales order
processing to ensure that product are delivered in the right quantity, to the correct
destination, and at the appropriate time. To survive in the modern business world,
companies should adopt a forward thinking-attitude. By adopting this attitude more
efficient strategic decision making and business planning processes can be done.
2.3.3 SCM User
SCM systems should be used by industries that depend heavily on the success
of an efficient system of working to produce a product. To produce a product, the
organization must move in a systematic manner to procure raw materials, process the
raw materials and produce the finished goods. All these should be done while taking
into account the demands of the customer.
The organization must be efficient in planning their whole production so that
they have the right materials at the right time, in the right amount and be able to
produce the goods in the time specified. By being able to do this, the organization
would be able to save on costs that would prove vital in the long run. SCM systems
offer such businesses the perfect solution to automate their inventories so that their
production would be more streamlined and efficient. Planning would be more
accurate and the demands of the customers would also be more predictable. Most
SCM systems nowadays offer the ability to forecast the trends of sales. This tool
would definitely prove valuable to businesses. Not only can SCM cut the costs of
operating but also generate more income as a result of increased customer
satisfaction.
2.3.4 SCM Strategy
SCM is developed in response to increasing global competitive pressures.
Besides that, a desired collaborative supply chain is one that is able to eliminate
inter-company bottlenecks, while maintaining security and authenticity between
trading partners. Supply chain management is successful when the measures taken
support the strategic aims of the company. The necessary acceptance in the company
can only be generated if this is the case. Vice-versa, the SCM strategy naturally also
has a considerable effect on the business strategy and must have an influence on it.
VISION
BUSINESS
STRATEGY
SUPPLY CHAIN
STRATEGY
SCM CONCEPT IMPLEMENTATION
Figure 2.1 Supply Chain Strategies
2.3.5 The Advantages of SCM
One of the advantages of SCM is to increase partner loyalty and maximize
bottleneck resource utilization. Some organisation gain experience reduction in
inventory cost and more efficient transportation network. Beside that, SCM make the
order handling much easier and greater transparency resulting in less executive time
being spent for routine enquiry. According to study that has been made, Mahindra &
Mahindra Limited can reduce inventory by 30% and replenishment lead times to 19
days. This study show how effective and efficient the SCM is. (SAP, 2002)
Sales
Suppliers
Manufacturing
$
$
Purchasing
SCM
Distribution Customer
Sales
Suppliers
Manufacturing
$
$
Purchasing
SCM
Distribution Customer
Figure 2.2 Supply Chain Management
2.3.6 Logistics Concept
Counsel of Logistic Management define logistic as the process of
planning, implementing, and controlling the efficient, effective flow and storage of
goods, services, and related information from point of origin to point of consumption
for the purpose of conforming to customer requirements.
Logistics supports goods receive process; goods issue process, inbound and
outbound delivery and the processes within the warehouse.
2.3.7 The Value Chain
Based on the definition of supply chain (SC), we know that the aim of supply
chain is to produce value for the ultimate consumer whilst satisfying other
stakeholders in the SC. The concept of value-added activity originated from Porter’s
value chain framework. The value added activities is divided into primary and
support activities. Porter defines the primary activities as ‘... the activities involved in
the physical creation of the product and its sales and transfer to the buyer as well as
after-sale assistance’. Support activities are defined as those that ‘... support the
primary activities and each other by providing purchased inputs, technology, human
resources, and various firm-wide functions’ (Porter, 1985). The value chain of an
organisation is the system of dependent activities; the execution of an activity
impacts the costs or effectiveness of other activities. Porter’s argument is that the
value chain may be used to identify and understand the specific sources of
competitive advantage and how they relate to creating added value for customers.
Figure 2.3 The Value Chain (Porter, 1985)
The value system is not a collection of independent activities, but a system of
interdependent activities. Suppliers do not only deliver a product, but they can also
influence a firm’s performance in many other ways. Many products pass through the
value chains of suppliers and their suppliers (Porter 1985). The term ‘system’ since
this suggests an interactive and dynamic set of relationships acting in concert with
one another. These relationships may not be linear, but interrelated in a complex web
that interacts dynamically to accomplish the end objective. In his view, the word
‘chain’ seems to connote distinctly different elements that are linked together, end to
end in a linear fashion. (Vorst, 2000)
2.4 The Organisation under Research
Kian Joo Canpack (Shah Alam) Sdn. Bhd. (KJCP) is a subsidiary of Kian Joo
Group of Companies. Based on the definition given by the Small Medium Industries
Development Corporation (SMIDEC), the company can be categorised as a small
enterprise with a paid-up capital of RM 1 million. The company currently employs
30 full time employees. KJCP formally started its operation in December 2004.
KJCP is an entity operating in the manufacturing-related service industry. KJCP is
involved in the business of packing milk powder.
2.4.1 Current Scenario in the Organisation
Currently, the company is using a manual system to keep track of the goings-
on in their organization. A lot of hard copy documents have been used in order to get
data and information. When sales person received order from customers, the
purchase order will be converted into sales order.
The employee will ensure all the materials are sufficient for production. If the
planner finds that there are shortages of materials in the warehouse, the planner will
request to purchase all materials needed. The planner also will plan the production
schedule. Production schedule refers to task and time of when the production shall
start and finish. Purchasing department will order all the requested materials to run
the production.
Supplier will send the materials ordered by the purchaser according to the
delivery date given. In this process, communications between customers and
suppliers will become very important because all the ordered items must be received
at right time and in the right quantity.
Production cannot start without all the materials. When all the materials are
received, production can start immediately. Finished goods are then packed and send
to the warehouse.
In normal cases, the customer will provide a delivery schedule attached with
the purchase order given earlier. Warehouse personnel will then arrange the delivery
of the finished good to the customer according to the schedule given.
Purchasing Production Supplier
Warehouse
Customer
Sales
Figure 2.4 Filing System in KJCP (S.A)
Figure 2.4 shows the current filing system in use in KJCP (S.A). Each
department uses their own filing system to keep their data and get information. Each
department takes a long time to retrieve information from other departments. This
hinders the smoothness and efficiency of information flow. As can be seen there is
no link between the departments which in turn makes inter department
communication a hassle. This only leads to inefficiency and data lost.
2.5 Current Trends in Employing SCM System
Table 2.2 shows the current trend of SCM around the world. Companies from
different industries have a wide choice of SCM systems to choose from.
Table 2.2 Current Trend in SCM
Company
Category
Corning Specialty
Materials
Mahindra &
Mahindra Limited
Surapon Foods
Public Co. Ltd,
Thailand
Generic SCM PeopleSoft SCM
Application
mySAP SCM
Intentia MOVEX
SCM
Industry Advance
Technology
Manufacturing
Tractor
Manufacturer
Food and
Beverages
Methodology Supply Chain
Operation
Reference (SCOR)
Model
Accelerated SAP
Methodology
....Enterprise
Reference
Models (ERMs)
....Business Process
Design Tool.
(BPDT)
Features ....Supply Chain
Planning
....Manufacturing
....Customer
Fulfillment
Management
....Supplier
Relationship
Management
....Demand
planning
....Production
Planning
....Scheduling
....Raw Material
Planning
....Quality Control
....Food Traceability
Software ....Oracle ....Windows NT
....Oracle
....Sybase Power
Builder.
....Oracle
Hardware ....Internet
Architecture
....Client-Server
....SAP NetWeaver
....IBM Server
Nowadays, names like PeopleSoft, SAP and Intentia have become a leader in
delivering the SCM system to business world. The system helps an organisation
transform a linear supply chain into an adaptive supply chain network. In a
competitive environment, SCM system helps coordination and collaboration
technology to extend operations beyond corporate boundary.
Based on my study, SCM can assist various industries to optimise their
capability in order to fulfill customer requirement. Various generic SCM were
developed such as mySAP, PeopleSoft and MOVEX to be introduced in current
market. The system is developed to become fully integrated products that are tailored
to meet the needs of specific industries. Features to support the SCM itself are
different among different industries. In food industries for example, the system have
to aware on the shelf-life of raw material. Planning and scheduling features become
very critical to overcome this problem.
Every developer has come out with their own models when developing their
business solution application. PeopleSoft is using Supply Chain Operation Reference
(SCOR) Model to simplify many processes that make up the supply chain. The
SCOR model enables organizations to identify and focus on five key processes: Plan,
Source, Make, Deliver, and Return. PeopleSoft break the SCOR model down into
three critical business processes that map to the flow of the complete supply chain —
and then map our complete solution to these processes. PeopleSoft flexible solutions
are designed to address these business processes from end to end.
Figure 2.5 PeopleSoft SCM Solutions.
PeopleSoft was using the Internet architecture to deliver their application.
This technology foundation is a key to extending business processes directly to
customers, suppliers, partners, and employees. Because all applications share the
same architecture, customers benefit from easier access to applications, lower cost of
maintenance and deployment, and centralized security administration. The Internet
architecture is easy to deploy, and this is not only helping to lower cost of ownership,
it is also helping to get closer to customers.
25
Figure 2.6 PeopleSoft Pure Internet Architecture
One of the benefits of using the Internet architecture is users have instant access
to applications from any Web device — inside or outside the firewall. Information
Technology organizations have reduced installation, maintenance, and administration
costs since the application resides on a server instead of being distributed to hundreds
or thousands of PCs.
Table 2.3 Benefits of PeopleSoft Internet Architecture (PeopleSoft, 2002)
The ability of the SCM vendor to give a solution is very important when we
decide to implement the system. Wide knowledge in industries helps the developer to
give better solution. Intentia has a wide range of customer categories. MOVEX SCM
can compete with biggest SCM vendor. Features provided by MOVEX SCM are
26
divided into three big categories with several sub-categories. Supply chain planning,
supply chain execution and resource and material planning.
2.6 Chapter Summary
This chapter discussed the research environment of SCM. Definition of SC
and SCM were given. History and background of the SCM is discussed to give clear
insight what the SCM is about, the user of the system and also the benefits gain by
company when implementing SCM. Current situation in company under research is
explained in detail. The explanations give better understanding on the company
situation. The project aim is to give a better solution to be implemented by the
company. Comparison has been made between various industry and SCM vendors in
current environment. Different approach is used to fulfill industries needs.
CHAPTER 3
METHODOLOGY
3.1 Introduction
To accomplish the objectives of this project, the right approach must be
applied in order to arrive to precise, accurate, reliable and factual conclusions.
Without the application of such approach the result gained from the research might
not be the right conclusion and the research can be deemed useless. Different
approaches have been used to collect data and information. Each of the approaches
has its own strengths and weaknesses depending on what type information that is to
be collected. In this project, three approaches have been used in order to collect
required data.
To develop the SCM system, a few methodologies were considered to be
used. Comparisons were made where the pros and cons of each methodology were
taken into careful consideration. The comparisons were made in order to identify the
best methodology that needed to be employed during the course of this project. By
employing right methodology it is hope that the system can be developed within the
time frame set and ultimately fulfill the objectives of this project.
3.2 Project Approach
Figure 3.1 shows the general overview of the approach that was used in this
project.
Project Approach
Data Collection
Requirement
Capturing
Data Analysis
Offline Resources Data Resources
Background
Information
Gathering
Interview
Software
Development
Methodology
Figure 3.1 Overview of Methodology Technique
3.2.1 Data Collection
In order to collect relevant information regarding this project, the data
collection method is used. This method was chosen as one of the methodologies
because of the large volume of information that can be gathered and reviewed. By
using this methodology, secondary data can be gathered and analysed. These data
can then be used to provide more information and result in a better understanding of
the subject matter.
3.2.1.1 Offline Resources
Offline resources refer to resources such as magazines, newspapers and
books. All the information from the resources provides the latest information about
the SCM and the technology being used. Books give deep understanding about the
SCM apart from reaffirming the concreteness of the information and also its factual
accuracy.
3.2.1.2 Online Resources
Online resources also provide a large amount of additional information. Such
information was retrieve from various web sites which provide articles, white papers
and journals. From these online resources, information regarding topics such as
architecture of the systems, technologies, vendors and other related project
information can be easily gathered. Such resources also provide relevant general
information that provides valuable data towards this research.
3.2.2 Requirement Capturing
There are two techniques to gather primary data that is to be analysed. The
analysis done on the data gathered will provide useful information that in turn will be
essence of this project. Requirements capturing will help to identify the current
situation and the activities involved in implementing the SCM system. Apart from
that, this methodology will also make feedback regarding the project easier to
collect. The methods used are background information gathering and interviewing.
3.2.2.1 Background Information Gathering
All the relevant background information was gathered in the company of
research. The information was provided through the briefing done by the Deputy
General Manager and other related staff. The briefing includes all the necessary
information regarding the current implemented system, business process, the
company policies and also other topics related to this project. The briefing was done
so as to ensure that a deep understanding of the current system and more importantly
the company itself.
3.2.2.2 Interview
Interviewing is technique used to solicit detailed information regarding the
subject of interest of this research. This includes software and hardware used and
also the problem that arise in current system. The interviews conducted were done in
both structured and unstructured manner. In the structured interview, a set of
questions were prepared prior to the meeting with the management team. In
unstructured interviews, questions were asked spontaneously to the team. All of the
questions asked were related to the scope and objectives of this project.
3.2.3 Data Analysis
Data analysis involves the process of filtering the data and information that
have been gathered from various resources. During the project period, large amounts
of data have been collected and analysed to produce all the important information
relevant to this project. All the irrelevant data were omitted from this project. From
the information gathered and produced, a better idea and understanding of the SCM
concept was gained.
31
3.3 System Development Methodology
To complete this project and produce the end result, the Waterfall Model
based on the Systems Development Life Cycle was used a guide.
Requirements
Solicitation and
Verification
Requirements
Analysis
System Design
System
Construction
Testing
Implementation
Figure 3.2 Waterfall Model Structure
3.3.1 Requirement Solicitation and Verification
In this phase of the system development, research was done with the aim of
gaining all the necessary knowledge regarding the Supply Chain Management. This
was done by conducting impromptu interviews with the top management. These
interviews consisted of several questions asked with the aim of gaining explicit
knowledge on how the management want the system to solve their problem, who is
the system user, what is the system scope and many more.
Responses to these questions were then incorporated into the design of the
system to create an intuitive and true-to-life system. This would ensure all the
important aspects and processes of the supply chain were captured in the system.
3.3.2 Requirements Analysis
When all the necessary responses were gathered, it was then analysed to
formulate the requirements of the system. The system’s requirements are identified
based on the findings of the first phase and documented. This requirements analysis
ranges widely from what is to be expected from the system, what functions it will
perform and the benefits it can bring to the organization implementing it.
3.3.3 System Design
Once all the necessary information regarding the contents of the system was
collected, the design process could then be commenced. The system was designed
with all the important aspects of the SCM process incorporated into it.
Initially the system was developed with only the necessary functions/modules
available. It was done as sort of a ‘skeleton system’, with only the major modules
and functions present. The aim of this process was to test all the modules of the
system.
Once all these modules were developed and tested, the system was then
redesigned to produce a more comprehensive system that took into account other
factors that would make a system more usable and viable. These factors include ease-
of-use, robustness and flexibility.
3.3.4 System Construction
In this phase, the system is then constructed using all the relevant software
and hardware needed for the completion of the product. It was constructed using all
the findings of the previous phases as a guide. A detailed description of the system
construction phase is described in Chapter 4 of this thesis.
3.3.5 Testing
The individual modules or programs are integrated and tested as a complete
system to ensure that the requirements have been met. After testing, the system is
delivered for implementation.
3.3.6 Implementation
After the testing phase is complete, which means that the system fulfils its
objectives and built according to the given specifications, the system is delivered to
the user. The system therefore shall be employed in a real-world situation whereby
any errors that arise can be detected and rectified through the process of system
maintenance.
3.4 Project Schedule
Gantt Chart shows the overall project schedule. Refer appendices
3.5 Chapter Summary
Several approaches were used in order to complete this project. Data collection,
requirement capturing and data analysis is used as the methodologies. System
development processes are the activities involved in producing an application
system. The waterfall methodology was selected to be used in developing this
system. The system development processes include user requirement solicitation and
verification, user requirement analysis, system design, system construction, testing
and implementation.
CHAPTER 4
SYSTEM DESIGN
4.1 Introduction
This chapter will discuss and explain in detail about the organization under
research. Information such as the organizational structure, functions, and core
business activities will be explained in detail.
Apart from that, the as-is processes, or original business process are pictured
in the Data Flow Diagram (DFD) and the Entity Relationship Diagram (ERD). With
the aid of these diagrams, the business flows that exist within the company can be
better illustrated and understood. Analysis of the current system in place at the
organization was done so that a better understanding of the current issues and
situations faced by the system can be obtained.
Solicitation of user requirements is a fundamental step because it would
ensure that the system to be developed is what the users want and is relevant to the
user. This step is also very important because the users are know the current system
better and therefore are better equipped to provide valuable feedback regarding the
flaws of the system. These flaws can later be solved by the newer system. This
chapter will also discuss the user requirements that were solicited from the users.
The overall picture of the system to-be or the newer improved system will be
illustrated through the use of DFD and ERD.
4.2 Organizational Analysis
Kian Joo Canpack (Shah Alam) Sdn. Bhd. is a wholly-owned subsidiary of
KJ Group Bhd. It was set up by the Group as a means for it to diversify into the
packing industry. Kian Joo Canpack (Shah Alam) Sdn. Bhd. was registered on 26
August 2004 accordingly to the company act 1965. Although producing packaging
material remains the main business of the group, it has also decided to venture into
the business of contract packing. Contract packing means that providing the service
of packing the products of clients who do not have or do not want to set up their own
packing line.
Kian Joo Group is listed on the Main Board of the Kuala Lumpur Stock
Exchange. It manufactures all types of tin cans and containers including 3 piece tin
cans , 2 piece aluminium beverages cans, corrugated carton boxes, PET bottles and
others plastic products.
Kian Joo Canpack (Shah Alam) Sdn Bhd is located at Shah Alam. The
objective of this company are to carry out the business as a third party contract
packing of milk powder for domestic & export market. To fulfil the needs of its
customers, KCPSA utilises sources for their raw materials from other subsidiaries
within the KJ Group. These other companies thus act as the suppliers for KJCPSA.
Among the companies that supply the raw materials are Federal Metal printing Sdn.
Bhd., Multi-Pet Sdn. Bhd., Box-Pak (M) Bhd. and Kian Joo Can Factory Sdn. Bhd.,
which is actually the Headquarters of the KJ Group.
The company sources the related packaging materials (tin cans, carton, tray,
spoon and cap) from Kian Joo Group of company which directly creates the status of
one stop packaging for Kian Joo Group.
The company currently operates one shift with twenty nine staff. KJCP’s
working hour starts from 7.45a.m to 6.00p.m for five working days. The
manufacturing line is capable to pack all can sizes range from 401Ø to 708 Ø or
weight from 400gm to 2500 gm .The plant is divide into three zones for good
hygiene practice which is 1) GHP (Good Hygiene area), 2) Caring Area and 3) High
Care Area. The employees need to look ahead to classify production areas into
various zones for Good Manufacturing Practices (GMP) purposes.
As a new set up operation for “Kian Joo Group”, Kian Joo CanPack has
become a vehicle for the group to enhance it status of competitiveness, at the same
time providing added value services. Thus the group is fully committed and
continues to upgrade its operation in order to continue improves the industrial
development.
4.2.1 Organization Structure.
Figure 4.1 Organization Structure of KJCP
4.3 Current Business Process and Data Model
As-Is Process is process flow the company implement currently. Context
Diagram, Data Flow Diagram and Entity Relationship Diagram are used to give clear
picture on As-Is Process.
4.3.1 Context Diagram and Data Flow Diagram
Figure 4.2 below shows Context Diagram for current system.
MANUAL
SYSTEM
SALES
PRODUCTION
PURCHASING
STORE
SUPPLIER
CUSTOMER
Supply order
Update
Previous
Order
Receive
Materials
Place Order
Generate Delivery
Order
Issue
Good
Transfer
Note
Production
Planning
Issue Purchase Order
Sales
Order
Report
Production
Report
Receive
Order
Generate
Purchase
Order
LOGISTICS Picking List
Report
Figure 4.2 Context Diagram for current processes
The existing manual system functions as follows:
(i)
Sales: Customer give purchase order to sales department. Sales
department will convert purchase order to sales order. Sales order
consist of order information such as previous balance order, item
ordered, quantity and delivery date. Sales order is a document that
records all the information about customer order.
(ii)
Production: Sales department will give sales order to production to
plan their production line. Production department will also check with
the warehouse to ensure that all the materials are sufficient to produce
the ordered items. If the materials stock is not sufficient to produce
the ordered items, production will request to buy the insufficient
materials to the purchasing department. When the ordered item was
produced, production report will generate and store in filing system.
(iii)
Purchasing: When the purchasing department receive material
requisition from production department, purchase order will issue to
the supplier to supply the material required. Beside that, purchasing
department also will monitor the previous balance order.
(iv)
Supplier: Suppliers will supply all the materials ordered.
Delivery order document will be recorded in filing system when
receive the materials.
(v)
Store: Store will receive the entire item from supplier and store all
the items produced by production. Store will update all the incoming
and outgoing items record. Store will ensure that all outgoing item
will deliver to the correct customer, in right quantity and at promised
time.
(vi)
Logistic: Picking list record is a record that gives the information of
items to be picked by the logistics to send all the finish good to the
customer.
(vii)
Customer: Customer place order to sales department using their
purchase order document. When the ordered fulfil by production
department, store will issue delivery order document to be send with
the finish good. Logistics will send the ordered items to the customer.
0
Manual
System
1.0
Create Sales
Order
2.0
Production
Schedule
3.0
Generate
Purchase
Order
4.0
Receive
Delivery
Order
5.0
Produce
Production
Report
6.0
Generate
Delivery
Order
1.1
Process
Purchase
Order
1.2
Update
Customer
Order
2.1
Production
Planning
1.3
Update
Delivery
2.2
Update
Materials
Needed
2.3
Material
Requisition
3.1
Check
Balance
Order
6.1
Picking List
Record
6.2
Transportation
Record
Figure 4.3 Decomposition Diagram for Current Process
Figure 4.4 below shows, the Level-1 of Data Flow Diagram in the As-Is
Process.
2.0
Production
Schedule
3.0
Generate
Purchase
Order
4.0
Receive
Delivery
Order
5.0
Produce
Production
Report
6.0
Generate
Delivery
Order
SALES
PURCHASING
CUSTOMER
SUPPLIER
LOGISTICS
STORE
PRODUCTION
1.0
Create Sales
Order
Order
Receive New Order
Update Order
Packing
Order
Order To Be Fulfill
Finish
Product
Update Finish
Product
Update Product
Availability
Check
Material
Availability
Packing
Material
Update Material Availability
Update
Order
New
Order
Fulfill Order
Update Item Received
Update Product
Received Update Delivery
Date
Supply Order
Check and
Supply
Update Transport
Availability
Fulfill
Product
Picking
Picking List
Figure 4.4 Level-1 Data Flow Diagram for current processes
4.3.2 Entity Relationship Diagram (ERD)
Diagram below shows Entity Relationship Diagram for current processes in
the company under research.
ORDER CUSTOMER SALES PRODUCTION PRODUCT
STORE
PRODUCTION
SCHEDULE
places
M Is
process
by
1M1
Is assigned to
produce
1 M
Is store in
1
M
M
1
SUPPLIER MATERIAL
supply Is store in
Is use for
request
1 M
1
M
1 M M
1
LOGISTICS
assign
supply to
1
M
PURCHASING
buy
1
M
ORDER CUSTOMER SALES PRODUCTION PRODUCT
STORE
PRODUCTION
SCHEDULE
places
M Is
process
by
1M1
Is assigned to
produce
1 M
Is store in
1
M
M
1
SUPPLIER MATERIAL
supply Is store in
Is use for
request
1 M
1
M
1 M M
1
LOGISTICS
assign
supply to
1
M
PURCHASING
buy
1
M
Figure 4.5 Entity Relationship Diagram for current processes
Company under research system is entirely manual. When customer place
order, sales department will process the order and assign production department to
fulfill the order. To run the production, production schedule must be produce to help
production department to run the production. Production will request for insufficient
material from purchasing department to buy materials. Supplier supplies materials to
store department. Store will issue materials to production. After order was fulfilled,
product produced is kept in store. Store will assign logistic department to supply the
product to customer according to delivery date given by customer.
4.3.3 Analysis of Current Situation
In current situation, all departments in the company under research using
their on filing system to keep track all the process. Information needed by other
department might not deliver in time. Sometimes the information is not right. Manual
system also increases possibility to receive information twice. Information
redundancy will lead to loss. Not even that, data and information might also loss
during transferring from one department to other department.
4.4 User Requirements
After conducting an interview to get the information, follows are the
requirement set by the user to be fulfilled.
4.4.1 Sales module
..
Allow user to input order.
..
Able to generate sales order.
..
Tracking of orders received.
..
Tracking orders received – By company, sales person
..
Allow blanket order (one purchase order, many delivery)
..
Specify and update standard costing.
..
Multiple report and enquiries.
..
Able to be linked to purchase Order (P.O) for direct from vendor to
customer.
..
Maintain sales person code
4.4.2 Purchase Order Module
..
Allow to create purchase order.
..
Set expected delivery date.
..
System tracking of ‘Required Date’, ‘Request By’ and ‘Expiry Date’
..
Additional information can be entered in ‘Remarks’
4.4.3 Inventory Module
..
Ability to check for insufficient stock level.
..
Ability to check stock in warehouse
..
Update stock in warehouse.
..
Ability to produce documentation for delivery.
4.5 Conceptual Design
This chapter will detail all the business processes in place at Kian Joo
Canpack Sdn. Bhd. and the models used to plan and build the system.
4.5.1 Business Process and Data Model
Figure 4.6 shows how the SCM system integrates all the databases into one
central database. They share common data that is needed by all the departments
involved in the supply chain. This integration eases the flow of information in the
organization. Compared to filing system illustrated in the literature review, the chain
shown was not connected properly and caused disruptions in the flow of information.
In the SCM system, information that is needed can always be obtained in a much
shorter time and more efficiently compared to other time-consuming systems.
Suppliers
Suppliers
Suppliers
Manufacturer
Warehouse
Customer
Figure 4.6 SCM System Overview
Figure 4.7 below shows DFD for processes in the company.
SUPPLY CHAIN
MANAGEMENT
0
INVENTORY
SUPPLIER
CUSTOMER
Manage order
Generate report
Manage purchases
Generate purchase
order
Display stock
transactions
Manage product
Manage product
transaction
Manage delivery
Figure 4.7 Context Diagram for the SCM System
Figure 4.8 below shows the Level 1 DFD Diagram for the SCM system in
KJCP.
product information
CUSTOMER
SUPPLIER
INVENTORY
SALES
PURCHASING
Delivery
Item Master
Opening Balance
Stock Transaction
Delivery Details
Customer Order
Sales Tax
Purchase Order
update stock
delivery order
purchase order
update inventory
update inventory 2
1
3
delivery notice
product information
Figure 4.8 Level 1 DFD Diagram for SCM System
Below is the decomposition model for the SCM system process.
0
Supply Chain
Management
System
1.0
6.0
Log-in
Log-out
4.0
Receive
Delivery
Order
5.0
Generate
Delivery
Order
3.0
Generate
Purchase
Order
2.0
Create Sales
Order
1.1
User
Register
1.2
User Login
Verified
User
2,1
Process
Purchase
Order
Update
Customer
Order
Update
Delivery
Sales
Report
2.2
2.3
2.4
Purchase Detail
Listing
Update PO Transportation
Record
3.1 4.1 5.1
Figure 4.9 Decomposition Diagram for SCM system
The figure 4.9 above explain the process involve in the SCM system. There
are six main processes in the system.
1. Login
2. Create Sales Order
3. Generate Purchase Order
4. Receive Delivery order
5. Generate Delivery Order
6. Logout
Purchase Order
PK Purchase OrderID
EmployeeID
SupplierID
ShippingMethodID
Purchase OrderCol 1
Employee
PK EmployeeID
FirstName
Title
EmployeeCol1
Supplier
PK SupplierID
SupplierName
ContactName
Address
SupplierCol 1
Shipping Method
PK ShippingMethodID
ShippingMethod
Orders
PK OrderID
CustomerID
EmployeeID
OrderDate
PurchaseOrderNumber
Order Details
PK OrderDetailID
OrderID
ProductID
Quantity
Inventory Transaction
Delivery
PK DeliveryID
CustomerID
ShipAddress
ProductID
Customer
PK CustomerID
CompanyName
BillingAddress
PK TransactionID
TransactionDate
ProductID
PurchaseOrderID
Products
PK ProductID
ProductName
CategoryID
UnitPrice
Category
PK CategoryID
CategoryName
1 M
1
M
1
M
1
M
1
M
1
M
1
1
M
M
M
M
M
1
1
1
Purchase Order
PK Purchase OrderID
EmployeeID
SupplierID
ShippingMethodID
Purchase OrderCol 1
Employee
PK EmployeeID
FirstName
Title
EmployeeCol1
Supplier
PK SupplierID
SupplierName
ContactName
Address
SupplierCol 1
Shipping Method
PK ShippingMethodID
ShippingMethod
Orders
PK OrderID
CustomerID
EmployeeID
OrderDate
PurchaseOrderNumber
Order Details
PK OrderDetailID
OrderID
ProductID
Quantity
Inventory Transaction
Delivery
PK DeliveryID
CustomerID
ShipAddress
ProductID
Customer
PK CustomerID
CompanyName
BillingAddress
PK TransactionID
TransactionDate
ProductID
PurchaseOrderID
Products
PK ProductID
ProductName
CategoryID
UnitPrice
Category
PK CategoryID
CategoryName
1 M
1
M
1
M
1
M
1
M
1
M
1
1
M
M
M
M
M
1
1
1
Figure 4.10 Entity Relationship Diagram (ERD) for Conceptual Design
Figure 4.10 above shows the ERD of the SCM system. ERD is use to model
the company requirement. Each of the entity will assign one primary key which
uniquely identify the entity. Each entity consists of several attributes which represent
the data that require by the system. The relationship of all the entity exists between
one or more entity. The Customer and Orders entities have one-to-many relationship.
This explains that a customer may place many orders or many orders can be placed
by only one customer.
4.5.2 System Architecture
The SCM system is an application that is accessible from client computers.
The system is placed on an application server where all relevant clients can access it.
By structuring the system accessibility this way, authentication and authorization of
users can be centralized and managed more efficiently. A set of clients that call on
service offered by the server will only be the set that has been granted the necessary
permissions.
Communications between the clients and the serve is done using LAN
connections. Since the system is only used within the premises and not shared with
Kian Joo Canpack’s other offices, it is therefore logical and practical to connect the
users and the server through the LAN connection already in place.
The system is designed as such that it supports user concurrency. That means
that it allows the application to be opened by different users, accessing multiple
modules at the same time. This feature enables the organization’s users to access the
system and complete their tasks without having to wait for their turn, like when using
log books in a manual system.
Database Server
Application Server
Switch
User’s PC (Client)
Local Area Network (LAN)
Figure 4.11 System Architecture for SCM system
4.6 Physical Design
In this section, the process flow of the system is detailed and explained. This
section is composed of several parts, namely, database design, the structure chart, the
interface chart, detailed modules / features and the system's architecture.
4.6.1 Database Design
This database consists of fifteen tables, which are:
1. Order
2. Order Details
3. Customer
4. Supplier
5. Employee
6. Delivery
7. Payment Methods
8. Payments
9. Purchase Orders
10. Categories
11. Inventory Transaction
12. Company Information
13. Reports
14. Products
15. Shipping Methods
4.6.2 Program (Structure) Chart
The SCM system consists of two level user login which describes as follows:
a. Administrator login – administer the system and control the master
file.
b. User login – a group of user that use the system to do their own task.
Main Menu
Admin Login
Update
User
Master
Record
Update
Employee
InventorySalesPurchasing
Delivery
Order
Create
Purchase
Order
View
Report
Customer
Order
Add
Customer
View
Inventory
Transaction
Create
Delivery
Order
View
Report
View
Report
Update
Product
Figure 4.12 The structure chart for Administrator Login
Figure 4.13 below explains the structure chart that illustrates the user login.
Each user of the system will be responsible for modules assigned to them only.
Main Menu
User Login
InventorySalesPurchasing
Create
Purchase
Order
Customer
Order
View
Inventory
Transaction
Delivery
Order
Create
Delivery
Order
Add
Customer
View
Report
View
Report
View
Report
Figure 4.13 The structure chart for User Login
4.6.3 Interface Chart
Figure below shows the interface chart of the SCM system.
User Login
Main Menu
Exit
Purchase
Order
Form
Customer
Order
Inventory Delivery
Order
View
Inventory
Transaction
SalesPurchasing
Right
Frame
Submenu
Right
Frame
Right
Frame
Submenu Submenu
Figure 4.14 SCM Interface Chart
Each page of the system modules are divided into 2 frames. At the left side of
the interface will display the form to key-in all the data. The right frame of the
interface will show all submenus which is link to other form.
4.6.4 Detailed Modules/ Features
The SCM system for KJCP consists of 3 main modules;
1. Sales Module
The sales module allows the user to create update the customer order
into the system once received from customer. Information such as
quantity required will then send to Inventory Module.
2. Purchasing Module
When the materials needed by production are lessen, purchase can
create and generate the purchase order to the supplier using the
system. Report will generate for management to analyse the
information about the purchases at the report in the purchasing
module.
3. Inventory Module
Inventory module will keep track all the information regarding on the
stock movement in the inventory. All products in and out will be
recorded in the system database. From this module, the user will know
the reorder level and the on hand balance of a product.
Beside of these 3 main modules, the system can create and update the
supplier and customer information. In addition the security feature is inclusive in the
system. Only authorised user is allowed to create, update and maintain the
information in the system.
4.7 Hardware Requirement
In order to run the application, certain hardware requirements must be met so
that the system can perform at its optimum level. The hardware requirement
designated for the system is as follows;
I.
PC with Pentium 4 2.0 GHz processor
II.
Hard Disk: 40GB
III. Memory: 512MB RAM
IV. Backup solutions attached, such as tape device.
4.8 Test Plan
The goal of testing is to expose latent defects in the system. To achieve this
goal several strategies or steps have been taken to the system’s integrity, durability
and robustness.
1. Design test cases – current business process cases
..
In this step, several scenarios are created. For example, when new
stocks are received from suppliers. When this happens, data such
as on hand balance needs to be updated. The test case takes into
account what happens, what steps to be taken, what needs to be
done, what triggers are generated and what is the desired result.
2. Prepare test real data to be tested.
..
To create a true-to-life test case, real data is obtained from Kian
Joo Canpack (Shah Alam) Sdn Bhd.
3. Run program with test data.
..
Such scenarios are then entered into the system and the system’s
responses are monitored for accuracy.
4. Compare result to test cases
..
The results obtained from the system are then compared to the
desired results as stated in the test case.
4.9 Chapter Summary
During the design process to build the SCM system, a detailed study of the
business processes involved had to be done. This step is very crucial due to the fact it
is upon these processes that the system's flow and concept would be designed. The
business processes involved form the basis of the objectives that this system needed
to fulfil. One effective part of the design process was to study the current manual
system in place at Kian Joo Canpack Sdn Bhd. The system's flow and logic was then
adapted into the new SCM system so that it could further enhance KJCP's efficiency
and productivity while minimising the time and cost needed to train user's to use a
thoroughly re-engineered business process. In the end, with all these processes in
mind and taking into account factors such as hardware requirements, the system was
designed as detailed in this chapter.
CHAPTER 5
DESIGN IMPLEMENTATION AND TESTING
5.1 Introduction
This chapter will detail the task of implementing and testing the finished
system. It will also provide the code structure of the system as well as screen shots of
the system.
In the implementation phase, a roll-out strategy is developed so that when the
system is implemented, little or no disturbance to the daily processes of the
organization is created. This would ensure no loss of man hours or revenue and thus
create a seamless transition from the old system to the new system.
Another step crucial to the successful implementation of the system is the testing
done prior to the implementation phase. Testing of the system is crucial due to
several reasons:
..
To detect bugs in the coding
..
To detect logical errors
..
To weed out unnecessary procedures
..
To test user-friendliness
..
To ensure the system’s flow is as efficient as it can be.
5.2 Coding Approach
The database coding of the system is using the SQL programming language.
The critical coding for this system as follows:
5.2.1 Sales Module
Some mathematical calculation is done to calculate the sales which are
coming for every order received from customer. The coding for this function is as
below.
SELECT [Order Details].OrderID, Customers.CompanyName,
Products.ProductName, Products.UnitPrice, [Order Details].Quantity,
[Quantity]*[Order Details]!UnitPrice AS SubTotal, [Order Details].Discount,
[SubTotal]*(1-[Discount]) AS [SubTotal With Discount],
Orders.SalesTaxRate, [SubTotal With Discount]*(1+[SalesTaxRate]) AS
[Total Price], Customers.CustomerID
FROM (Customers INNER JOIN Orders ON Customers.CustomerID =
Orders.CustomerID) INNER JOIN (Products INNER JOIN [Order Details]
ON Products.ProductID = [Order Details].ProductID) ON Orders.OrderID =
[Order Details].OrderID
ORDER BY [Order Details].OrderID, Products.ProductName,
Orders.SalesTaxRate;
5.2.2 Inventory Module
SQL query for inventory transaction is as follow.
SELECT [Inventory Transactions].OrderDetailID, [Inventory
Transactions].DONo, Products.ProductName, [Inventory
Transactions].UnitsSold
FROM Delivery INNER JOIN (Products INNER JOIN ([Inventory
Transactions] INNER JOIN [Order Details] ON [Inventory
Transactions].OrderDetailID=[Order Details].OrderDetailID) ON
(Products.ProductID=[Order Details].ProductID) AND
(Products.ProductID=[Inventory Transactions].ProductID)) ON
Delivery.DeliveryID=[Inventory Transactions].DONo;
5.2.3 Delivery Transaction
Below is the SQL query to perform deduction of the stock in the inventory
when delivery to customer is made.
SELECT Delivery.DeliveryID, Delivery.DONo, Delivery.CompanyName,
Delivery.ShipAddress, [Inventory Transactions Query].OrderDetailID,
[Inventory Transactions Query].ProductName, [Inventory Transactions
Query].UnitsSold
FROM Delivery INNER JOIN [Inventory Transactions Query] ON
Delivery.DeliveryID=[Inventory Transactions Query].DONo;
5.3 Test Result / System Evaluation
The testing has been done on the SCM system to detect any problem or
malfunction. The testing procedure is one of the important parts of the system
implementation. The testing has been done to ensure that the system has been
implemented stably and function appropriately. Testing is also been carried out to
ensure the system meet the user requirement.
Three steps have been performed to carry out the testing procedure. The three
steps require the user to test their responsible module. The three steps are:
1.
Unit testing
Unit testing has been done to during every modules development. The testing
procedure will detect and report the problem occurred early.
2.
Integration testing
Integration testing is which the individual modules are combined and tested
as a group. The testing is to verify functional, performance and reliability
requirements placed on major design items.
3. System testing
The testing is conducted on a complete, integrated system to evaluate the
system's compliance with its specified requirements.
The test result for this SCM system as shows in table 5.1.
Status
Login 1. Proceed to main
menu if the user login
is accepted.
2. Unauthorized user
will be rejected and
error message will
prompt.
1. As expected
result.
Complete
Main menu 1. Will proceed to the
sub-modules.
2. All buttons are
function and go to the
correct linked page.
1. As expected result Complete
Sales 1. Create, update and
modify the customer
order.
2. Calculate and
display the total
amount of order.
3. Display all the
required information.
4. Buttons and link
can perform as
required.
1. As expected result
2. Calculations are
done perfectly.
3. Buttons and links
perform correctly.
Completed
Purchasing 1. Create, update and
modify the order to
supplier.
2. Calculate and
display the total
amount of order.
1. As expected result
2. Calculations are
done perfectly.
3. Buttons and links
perform correctly.
Completed
3. Display all the
required information.
4. Buttons and link
can perform as
required.
Inventory 1. Retrieve data from
Sales and Purchasing
module.
2. On hands balance
are calculated
perfectly.
3. Stock movement
can be trace and
generate report.
4. Buttons and link
can perform as
required.
1. All tested items
produce an expected
result.
Complete
Others 1. This module should 1. As expected result Complete
1. Employee perform create,
2. Customer delete, update, modify
3. Supplier the data.
4. Product 2. Buttons and link
5. User can perform as
required.
Table 5.1 Testing Result
5.4 User Manual for Administrator
In this section, the user manual is provided to the administrator. This manual
is created to help the administrator to use the system.
Figure 5.1 Main menu
After login using to the administrator environment, this screen will be
display. From this menu, administrator are required to fill in the company
information and other master file information such as customer details, supplier
details, user details. This master information can only be entered by the system
administrator.
Figure 5.2 Company Information Page
Figure 5.3 Employee Information Screen
Figure 5.4 Customer Information page
Figure 5.5 Supplier Information page
5.4.1 Sales Module
Select the Sales
Module option
Figure 5.6 Main Menu of SCM System
Figure 5.6 Create and Delete Customer Order
5.4.2 Purchasing Module
From the main menu page, select Purchasing Module submenu.
Figure 5.7 Purchase Order page
Figure 5.7 above shows the page to generate the purchase order to supply.
The information of the purchases will be display. Figure 5.8 shows the report will be
generated after all the information has been keyed-in.
Figure 5.9 Purchase Order Report
5.4.3 Inventory Module
This module will keep track and display the stock movement record by
product. This module also will display the balance stock of a product in the
warehouse.
Figure 5.10 Inventory Module sub-menu
Figure 5.11 Stock Movement Record
Figure 5.12 Add or Delete Product page
5.4.4 Report
There are several report can be generated by the SCM system.
Figure 5.13 View Reports sub-menu
73
5.5 Chapter Summary
Implementation and testing phase discussed in this chapter is a guideline to
the administrator to install and maintain the SCM system. Testing phase is one of
the major and critical parts to the system in order to meet the entire user requirement.
CHAPTER 6
ORGANIZATIONAL STRATEGY
6.1 Introduction
This chapter will discuss the organizational strategy involving the usage and
implementation of SCM systems. The main focus will be the roll-out strategy in
implementing an SCM system Kian Joo Canpack (Shah Alam) Sdn. Bhd. (KJCP).
In order to implement the system, a few areas and aspects must be
considered. These aspects are discussed further in this chapter.
6.2 Roll-Out Strategy
Before the system is fully launched live within the organization, a pilot
system would be launched first. The reason for this is because since KJCP has no
prior experience in running an SCM system, the pilot system is would be used to
familiarize the personnel of the organization with the workings of the system.
To recreate a real world test of the system, the pilot system is loaded with all
the relevant data that are used in KJCP. Both the management and the end-users of
the organization are then required to make scenarios analyses in order to assess the
capabilities of the system when applied in the real world environment.
Users of the system are trained using the pilot system. This move would
ensure no damages and data loss are caused to any of the organization’s data. The
training is conducted using the modules that are available in the system. Each user is
then trained to use only the module that applies to them. This training is done in such
a way so that it would closely mimic real-world situations. This is done so that users
of the system would quickly grasp the workings of the system. Familiarization is a
very important step as it would very likely be an important factor of success. This
step is even more important considering the fact that the organization in question has
no prior experience in using SCM systems. It is inevitable that the implementation of
the system will change the work habits of the end users. Therefore it is very
important to make sure that the changes that take place are positive changes and not
detrimental to the organization.
The training is divided into 3 main modules; namely:
1. Purchasing
2. Sales
3. Warehouse
Training for each module shall be conducted for 2 days. An additional 3 days
is then allocated for hands-on training.
Prior to running the actual system, all stock on-hand, and all outstanding
tasks will be entered into the system, just like outstanding purchase orders. Such
information will provide continuity and present a seamless and smooth transition
from a manual working environment to an automated one.
6.3 Change Management
The SCM system shall be owned, maintained and administered by the
Administration Department. Ownership of this system falls to the Administration
Department because the organization does not have an I.T Department. However, the
Administration Department does get technical assistance from the I.T Department of
the Headquarters. Basically, the Administration Department needs to maintain and
manage the system to ensure it functions properly in line with business needs and
business flow.
Implementing the system is a very big challenge to all the people involved in
the process. This is due to the fact that the process requires in-depth involvement of
personnel in the training phase of the system. This highly crucial step may very well
determine the success of the systems implementation in KJCP. Once this is done, the
system should prove to be a valuable addition to KJCP and efficiency, effectiveness
and overall performance would definitely improve.
6.4 Data Migration
Data migration is the task of transferring business-critical data to the new
system. This task is a logical step in migrating from one system to another. If done
correctly data migration will replace or enhance functionality of the new system.
That system will then maintain the sort of data as was previously handled by the old
system. Thus, information from current system should map to the new system with
ease.
Implementing the new system in KJCP will only require minimal data
migration. What is needed is only the transfer of historical data from the manual
system. These data will then be processed by the new system.
The most significant problem with data migration is that people may not
understand the complexity of data transformation until they have undergone the
process. With a data migration plan that involves everyone user, each user will then
be responsible to migrate their own set of data. Such a move will then ensure that
responsibility and accountability issues are also involved in the transitional process
from manual to automated environment.
6.5 Business Continuity Plan (BCP)
One of the aspects that need to be addressed when implementing the
system is the Business Continuity Plan (BCP). A proper BCP is vital in ensuring that
the organization does not experience any interruptions during the transitional period.
One effective strategy is creating and maintaining updated data
backups. Once this is done, all information created after the backups were made
would then be keyed into the new system manually. Next, synchronization of the
information would be needed. This will eliminate any data inconsistencies between
the recovery site and primary site.
6.6 Benefits of the System
By implementing the new system, over time, a number of benefits can be
seen. Among the positives gained would be;
-
An improved flow of materials from one section of the process to another
section.
-
Data accuracy would greatly improve as a result of using automated
processes, rather than relying on manual efforts.
-
Delivery of finished goods would also improve.
-
Enhanced inter-operational communication and cooperation.
-
More efficient and effective tracking of orders.
-
Enhanced, improved and more efficient inventory keeping.
6.7 Chapter Summary
KJCP, by implementing the SCM system understands that it stands to benefit
greatly from using the system in the long run. However, to make sure that the system
is implemented successfully, a strategy was needed to ensure the smooth transition
from using a manual system to an automated one can be done. By that, it is meant
that the users must be able to grasp the ins and outs of using the system. By using an
automated system, there is bound to be some minor changes to how the users usually
work previously. These changes, no matter how small, can prove to be a deciding
factor on whether the system succeeds or not.
Therefore KJCP has made it a priority to provide training to users,
implementing test cases through rigorous testing and designing a practical roll-out
strategy so that disruptions and changes that occur within the company will be at a
minimum.
CHAPTER 7
DISCUSSION AND CONCLUSION
7.1 Achievement
Main achievement of this project would be the successful migration from
using a manual system to a fully automated and integrated system. To the
organization involved, this signals a major step up for them in terms of technology
used in their working environment. Although this would mean considerable amounts
of training, it does not hinder the organization from pursuing their mission of
modernizing their operations.
As a result of implementing this system, data integrity is more preserved
since it no longer involves manual updating of multiple records. This ensures that
duplicates are eliminated and the data available in the system is the latest version.
Ultimately, an increase in efficiency, effectiveness and speed can be seen in
the organization.
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1 comments:
Where is the thesis? Can you please post, will be looking fwd!
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