South Asian Journal ofEngineering and Technology Vol.6, No.1 (2018) 10–14

ISSN No: 2454-9614

A Study OnInventory Control Management System In Construction Industries

I.Jayanth1, V.Sampathkumar2

PG scholar1,Assistant Professor2,

Department of Civil Engineering

Kongu Engineering College,

,

ABSTRACT

Construction materials comprises over half of the aggregate cost of the task. Proficient materials administration assumes a key part in the effective consummation of the task inside evaluated cost and time. Consequently, endeavors ought to be done taken to diminish material cost. In real practice most exertion are done to diminish work cost. The cost, quality and time are essential target of material administration. Stock administration includes capacity, distinguishing proof, recovery, acquirement, and transport and development techniques. Each is permanently connected to wellbeing, profitability and calendar execution. Propel material obtainment or deferred both can influence cost, quality and time. So it is imperative to get material at right cost, at right quality and ideal time. This can be accomplished by utilizing material administration methods, for example, ABC, VED and SDE arrangements. This investigation experiences the way toward dissecting the organization's present gauging model and prescribing a stock control model to enable them to fathom their present issue. The principle target of the investigation is to dissect the stock administration control embraced and the compelling usage of stock at the construction site with the assistance of the SPSS programming

Keywords—Site Engineeer, Inventory Management Techniques, Material management, Stores, Construction Industry.

Received: 11/9/2017, Revised: 24/11/2017 and Accepted:4/1/2018

INTRODUCTION

The term inventory refers to the goods or materials used by a firm for the purpose of production and sale. It also includes the items, which are used as supportive materials to facilitate production. Nearly 60% of money is allotted for the inventory in a project.

Inventory constitutes one of the important items of current assets, which permits smooth operation of production and sale process of a firm. Inventory management is that aspect of current assets management, which is concerned with maintaining optimum investment in inventory and applying effective control system so as to minimize the total inventory cost.

Materials Management is related to planning, procuring, storing and providing the appropriate material of right quality, right quantity at right place in right time so as to co-ordinate and schedule the production activity in an integrative way for an industrial undertaking. Inventory Management is simply the process by which an organization is supplied with the goods and services that it needs to achieve its objectives of buying, storage and movement of materials.

Inventory management systems are central to how companies track and control inventories. Having the ability to measure inventory in a timely and accurate manner is critical for having uninterrupted business operations because inventory is often one of the largest current assets on a company's balance sheet. Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. Accounting inventory is considered an asset. Inventory management is required at different locations within a facility or within multiple locations of a supply network to product the regular and planned course of production against the random disturbance of running out of materials or goods.

Two inventory management systems exist: perpetual system and periodic system.

1.1PERPETUAL SYSTEM

The perpetual system uses a permanent inventory account to track inventory purchases and uses. The purchase directly increases the balance of the inventory account during a business cycle. Conversely, when a company sells goods from the existing inventories, the sale directly decreases the balance of the inventory account. Under the perpetual inventory system, companies are able to maintain a continuous record of changes in inventory and thus, have up-to-date information about their inventory holdings at any point of time.

1.2PERIODIC INVENTORY SYSTEM

The periodic inventory system uses a temporary purchase account, and an inventory account used only on a periodic basis. The purchase goes to the purchase account without affecting the inventory account at the time during a business cycle. Later, when a company sells goods from the existing inventories, it does not track the inventory reduction through the inventory account as it occurs, and the sale also does not affect the purchase account. At the end of a business cycle, the purchase account is closed and its balance is added to offering inventory. To determine the ending inventory balance, companies must conduct a physical inventory count.

OBJECTIVES

The objectives of this research are stated below

  • To study inventory management system in construction industries based on size of the project, type of the structure, existing management principles.
  • To find out the optimum level of inventory to be ordered at a point of time.

SCOPE OF THE STUDY

This concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting and also by replenishment or can be defined as the left out stock of any item used in an organization.

LITERATURE STUDY

Aditya A. Pande, et al.,(2015)- It is defined materials management functions which include planning and material take off, vendor evaluation and selection, purchasing, expenditure, shipping, material receiving, warehousing and inventory, and material distribution. In this project they have prepare scheme of material management in The construction industry for building project also conducting survey of industry and determine the various format for construction material management . As well as talk over the tracking system of material management in the industry and also discuss the software technology developed for proper management.

Angel Raphella.S, et al.,(2014)- As a result to today’s uncertain economy, companies are searching for alternative ways to stay competitive. This study goes through the process of analyzing the company’s current forecasting model and recommending an inventory control model to help them solve their current issue. As a result, an Economic Order Quantity (EOQ) and a Reorder Point was recommended to help them reduce their product stock outs. The shortage of raw material for production always makes the process discontinuous and reduces the productivity. The ABC analysis technique for the inventory control system is first used to identify the most important multiple products and then the economic order quantity (EOQ) of each product is developed to find their inventory model equation individually.

Ashwini R. Patil, et al.,(2013) has analysed that if the tender is quoted accurately so that non tender will not arises because basic rate of material fluctuate day to day leading to increase in cost. Instead of quantities that item should be quoted as rate only item so it is profitable to contractor & client. The total cost of inventory after adopting EOQ analysis is less than without adopting EOQ.

Dipak P. Patil, et al.,(2014)has observed that the financial results in terms of saving in inventory cost resulting in cost optimization, reduction in project completion time with help of detail study, analysis and application of inventory control systems to a case study.

Ehrenth.J.C.F, et al.,(2014)investigate the value of accounting for demand seasonality in inventory control, and their problem is motivated by discussions with retailers who admitted to not talking perceived seasonality patterns into account in their replenishment systems. Then they find that not accounting for demand seasonality can lead to substantial optimality gaps, yet incorporating only some of demand seasonality does not always lead to cost savings.

Jinpyo Lee, et al.,(2013)has analysed a periodic review pricing and inventory replenishment problem which encounters stochastic demand under a situation with fixed ordering cost and lost sales. Moreover, they consider a situation in which the random variable for the demand is general.

JoeriPoppe, et al.,(2017)has analysed the impact of the maintenance policy on the inventory requirements and the corresponding costs for a setting that is realistic at an OEM in the compressed air industry. Their analysis sheds light on the behaviour of the inventory related costs under various maintenance policies.

Kasim.N.B, et al.,(2005)has analysed that the Materials management is particularly problematic on fast-track projects where design and procurement decisions are made concurrently with construction activities. This paper reports on the early stages of research which is developing a new ICT-based approach to managing on fast-track schemes. The findings reveal the need for more sophisticated materials management solutions which accord with the needs of fast-track schemes. The paper concludes by presenting a research framework for developing such a system in the future.

METHODOLOGY

From the extensive literature study it is much clearer to contribute directly for the successful completion of the project, are influenced by inventory management system. In particular, researches were conducted to small extent to explore about inventory management in construction projects. This causes impact on performance of the inventory management. To yield a desired performance, it is necessary to ensure the project work effectively. Questionnaire survey was conducted among construction professionals to identify their opinion towards inventory management system in their organization. The obtained data is analyzed to find out the frequency of response for various factors.

FACTORS IDENTIFICATION

There are some factors which influence inventory management system. These factors were identified based on literature study.

•To identify the need for stock/inventory

•To analyse the importance of inventory

•To identify the cost allocation for inventory

•To identify the importance of labours in inventory

•To analysis the freight charges that affect inventory.

Literature study was conducted to

•To consider factors from recent researches

•To know how other researchers conducted their study over inventory

•To identify reason for considering factors.

DESCRIPTIVE STATISTICS

In this survey totally 100 questionnaires were distributed to the targeted respondent in order to identify the optimum level of inventory in construction industry. In those 82 responses has been received. The responses rate of this survey was 82%. The response rate will be explained in the below table and chart by using SPSS software and to implement some inventory management techniques to maintain effective inventory in the construction site.

Table.1 Response rate

DESCRIPTION / SURVEY COLLECTED
Questionnaire Distributed / 100
Response Collected / 82
Respondent Rate / 82%

RELIABILITY TEST

In this study, the method utilized for evaluating is Cronbach’s reliability. To establish the internal consistency, Cronbach’s Alpha value was used to access the reliability of the scale considering the minimum value of 0.7 (cronbach 1970, Nunnally 1978) the calculator value was 0.726 which exceed the threshold limit.

Table.3 Reliability test

Cronbach’s Alpha / No. of Items
0.726 / 37

KMO and Bartlett's Test

Prior to the extraction of factors, KMO and Bartlett’s test has to be performed

Table.4 KMO and Bartlett’s test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. / .710
Bartlett's Test of Sphericity / Approx. Chi-Square / 910.400
df / 435
Sig. / .000

Factor analysis was administered to identify the important construction site inventory methods and to establish here suitability for further analysis. The KMO measure of sampling adequacy was 0.710 confined that they was significant correlation among the variable to apply the factor analysis.

CONCLUSION

Inventory management system is considered to perform a key role in an organization, which are responsible to complete the company’s project in a specific budget within a certain period of time. It is very clear that inventory management of any construction will undergo intense stress in their work environment. This study “A Study on inventory control management system in construction industries”, provides a detailed investigation with their impact towards performance. The questionnaire was prepared and distributed to various construction companies

References

[1]Aditya A. Pande, Sabihuddin. S (2015), “Study of Material Management Techniques on Construction Project”,International Journal of Informative & Futuristic Research,ISSN: 2347-1697, Vol.2, No.9, pp.3479-3486.

[2]Angel Raphella.S, Gomathi Nathan.S, Chitra.G (2014), “Inventory Management- A Case Study”, International Journal of Emerging Research in Management &Technology,ISSN: 2278-9359, Vol.3, No.3, pp.94-102.

[3]Ashwini R.Patil, Smita V. Pataskar (2013), “Analyzing Material Management Techniques on Construction Project”, International Journal of Engineering and InnovativeTechnology (IJEIT), Vol.3, No.4, pp.96-100.

[4]Dipak P. Patil, Pankaj P. Bhangale, Swapnil S.Kulkarni (2014), “Study Of Cost Control on Construction Project”, International Journal of Advanced Engineering Research and Studies,Vol.01-02, ISSN2249–8974.

[5]Ehrenthal.J.C.F, D. Honhon, T. Van Woensel (2014), “Demand seasonality in retail inventory management”, European journal of operational research, No.238, pp.527-539.

[6]Jinpyo Lee (2014), “Dynamic Pricing inventory control under fixed cost and lost sales”, Applied Mathematical Modelling, No.38, pp.712-721.

[7]Joeri Poppe (2017), “Numerical study of inventory management under various maintenance policies”, Reliability Engineering and system safety,pp.1-12.

[8]Kasim.N.B, Anumba.C.J and Dainty.A.R.J (2005), “Improving materials management practices on fast-track construction projects”, Association of Researchers in Construction Management, Vol. 2, pp. 793-802.

[9]Matsebatlela.M.G, Mpofu.K (2015), “Inventory Management Framework to minimize supply and demand mismatch on a manufacturing organization”, International Federation of Automatic Control, Vol.3, No.48, pp-260-265.

[10]Sayali Shet, Raju Narwade (2016), “An Empirical Case Study Of Material Management In Construction Of Industrial Building By Using Various Techniques”, International Journal of Civil Engineering and Technology, pp.393-400.

[11]Ujjavala Patel, Anand Patel (2017), “Application Of Inventory Material Management Techniques In Construction Project-Case Study”, Journal of Emerging Technologies and Innovative Research, pp.141-147.

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