IMPROVING RECORDING ACCURACY IN THE RETAIL STORE; SUPPORTING INVENTORY PHYSICAL COUNTING

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SUPPORTING INVENTORY PHYSICAL COUNTING

(CASE STUDY: TOKO PRAPATAN) Page 1 of 139

Jonathan Nataprawira

IMPROVING RECORDING ACCURACY IN THE RETAIL STORE; SUPPORTING INVENTORY PHYSICAL COUNTING

(CASE STUDY: TOKO PRAPATAN)

By

Jonathan Nataprawira 1-1208-055

A Thesis submitted In Partial Fulfillment of the Requirements for

BACHELOR OF SCIENCE

DEPARTMENT OF INDUSTRIAL ENGINEERING

FACULTY OF ENGINEERING

SWISS GERMAN UNIVERSITY EduTown BSDCity

Tangerang 15339 INDONESIA Telp. +62 21 3045 0045

Fax. +62 21 3045 0001 E-mail: [email protected]

www.sgu.ac.id

2012

Revision after the Thesis Defense on 24^th of July 2012

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STATEMENT BY THE AUTHOR

I hereby declare that this submission is my own work and to the best of my knowledge, contains no material previously published or written by another person, nor material which to a substantial extent has been accepted for the award of any other degree or diploma at any educational institution, except where due acknowledgement is made in the thesis.

_______________________________________ ________________

Jonathan Nataprawira Date

Approved by:

________________________________________ __________________

Ir. Invanos Tertiana, MBA Date

________________________________________ __________________

Dr. Ir. Tutuko Prajogo , MSMfgE Date

______________________________________ _________________

Chairman of the Examination Steering Committee Date

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ABSTRACT

IMPROVING RECORDING ACCURACY IN THE RETAIL STORE;

SUPPORTING INVENTORY PHYSICAL COUNTING (CASE STUDY: TOKO PRAPATAN)

By

SWISS GERMAN UNIVERISTY Bumi Serpong Damai

Ir. Invanos Tertiana, MBA, Thesis Advisor Dr. Ir. Tutuko Prajogo, MSMfgE, Thesis Co-Advisor

The objective of physical counting is to give a full reports on the performances of stock in a business; including the condition, amounts, value, or even the history of stock. Accurate inventory record is essential as the source of physical counting guidelines. This thesis research is intended to investigate the inventory recording system and physical counting process in Toko Prapatan. To precisely describe the process, business process modeling technique using IDEF0 as the tools are chosen.

Sample selection is being done by using ABC classification, while Human Error Assessment & Reduction Technique measures the performance of existing system. In inventory management, it is important to keep and maintain any source of information on the record. Application of the basic system appropriately and effectively, accompanied by maximizing existing resources is an option for improvement other than applying new technology.

Keywords: Physical Counting, Inventory Record Accuracy, Record Management, Human Error Assessment & Reduction Technique

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DEDICATION

I dedicate this thesis to God, my family, and my lecturers in Swiss German University.

Using no way as a way, using no limitation as limitation.

Bruce Lee

Dream as if you’ll live forever, live as if you’ll die today.

James Dean

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ACKNOWLEDGMENTS

First and foremost, the author wishes to express the highest praise to the almighty God for all blessings during the completion of this thesis.

The author also would like to show his greatest appreciation to Ir. Invanos Tertiana, MBA, and Dr. Ir. Tutuko Prajogo, MSMfgE, as advisor and co-advisor in this thesis, for their suggestions and critics during this thesis work. Without their encouragement and guidance this thesis project would not have materialized.

The author gives his love and gratitude to his beloved families & Shirley Tania Sujudi; for their understanding and endless love, through the duration of this thesis research.

To students of Swiss German University batch 2008, especially Industrial Engineering classmates, for an amazing four years of study.

Last but not least, to all components of Swiss German University; including lecturers, staffs, and employees who were cooperative and helpful for the ease of completing this thesis.

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TABLE OF CONTENTS

STATEMENT BY THE AUTHOR ... 2

ABSTRACT ... 3

DEDICATION ... 4

ACKNOWLEDGMENTS ... 5

CHAPTER 1 – INTRODUCTION ... 12

1.1. Background ... 12

1.2. Thesis Scope ... 12

1.3. Research Problem ... 13

1.4. Research Objectives ... 13

1.5. Problem Limitations ... 14

1.6. Hypothesis ... 14

1.7. Thesis Organization... 14

CHAPTER 2 – LITERATURE REVIEW ... 16

2.1. Introduction ... 16

2.2. Assets ... 16

2.2.1. Fixed Assets ... 16

2.2.2. Current Assets ... 17

2.3. Inventory ... 18

2.4. Inventory Record Accuracy ... 20

2.4.1. Importance of accuracy record ... 20

2.4.2. How to measure accuracy ... 21

2.5. Inventory Record Inaccuracy ... 22

2.5.1. Environmental factors ... 25

2.5.2. Establishing tolerances... 26

2.5.3. Cost of inaccuracy... 28

2.5.4. Methods to improve accuracy ... 29

2.6. Cycle Counting ... 30

2.7. Physical Inventory ... 31

2.7.1. Counting Methods ... 32

2.7.2. Organization of annual stocktaking ... 33

2.8. Others ... 35

2.8.1. Business Process Reengineering ... 35

2.8.2. Leavitt‟s Diamond Framework ... 37

2.8.3. Record Management ... 38

2.8.4. Human Error Rate Assessment and Reduction Technique ... 38

2.8.5. ABC Classification ... 39

2.9. Concluding Remarks ... 39

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CHAPTER 3 – METHODOLOGY ... 41

3.1. Introduction ... 41

3.2. Thesis Methodology ... 43

3.2.1. Exploratory Research ... 43

3.2.2. Descriptive Research ... 43

3.2.3. Process Assessment ... 43

3.2.4. Setting Standard & Expectations ... 44

3.2.5. Gap Analysis ... 44

3.2.6. Alternative solution ... 44

3.3. Record Management Methodology ... 45

3.3.1. Identifying Records ... 46

3.3.2. Improving Record System ... 46

3.4. Human Error Assessment and Reduction Technique Methodology ... 47

3.5. ABC Classification ... 48

3.6. Concluding Remark... 49

CHAPTER 4 – RESULT & DISCUSSION ... 50

4.1 Introduction ... 50

4.2 Company Overview... 50

4.2.1. Company Profile ... 50

4.2.2. Organizational Structure ... 52

4.2.3. Value Chain ... 53

4.3 Collections of data ... 56

4.3.1. Reports ... 56

4.3.2. Observations ... 57

4.3.3. Interviews ... 58

4.4 Assessment & Gap Analysis ... 58

4.4.1. Standard & Expectation ... 59

4.4.2. As – Is ... 66

4.4.3. Benchmarking & Compliance Fulfillment... 71

4.4.4. Human Error Assessment and Reduction Technique ... 75

4.5 Room for Improvement ... 78

4.6 Record Management ... 85

4.6.1. Existing Document... 85

4.6.2. Proposed Document ... 88

4.7 Proposed Methodology ... 91

4.7.1. New Organizational Structure... 91

4.7.2. Regulations ... 93

4.8 Concluding Remarks ... 95

CHAPTER 5 – CONCLUSION AND RECOMMENDATION ... 96

5.1 Concluding Remarks ... 96

5.2 Recommendation ... 96

GLOSSARY ... 98

REFERENCES ... 99

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APPENDIX C – OBSERVATIONS... 131 APPENDIX D – CONTACT REPORT & PROJECT SCHEDULE ... 134 CURRICULUM VITAE ... 139