1. AUTOMOBILE DEALER INVENTORY MANAGEMENT
T. DHEEPAN Anna University, India, dheepseela@gmail.com,
B.BALA MURUGAN Anna University,India,bala_ramnad@yahoo.co.in
Abstract
Effective Inventory Management enables an organization to meet or exceed the
expectations of the customers regarding product availability, while maximizing net profits or
minimizing costs. "Inventory" is one of the most visible and tangible aspects of doing business to many
small business owners. This paper illustrates the development of an inventory management software
which is a reflection based on the learning, and insights gained from a wide range of similar software
systems provided to the leading automobile dealers by their parent companies at Chennai, India. This
paper highlights the effective translation of the “voice of the customer”, gathered during market
research, into requirements using the Quality Function Deployment. The challenges encountered by
the automobile dealer in placing the optimal order for the inventory at the optimal time are addressed
by the software. The knowledge provided by the software with salient features such as the “Current
Stock in Hand”, “ Economic Order Quantity”, “Reorder Point”, “Bin location” aims to resolve these
challenges. Finally the paper discusses the benefits realized by the application of the software which
are achieving improved forecast accuracy, improved planning and scheduling capabilities, increased
asset utilization, and enhanced customer satisfaction.
Keywords: Inventory Management, Quality Function Deployment

2. 1
INTRODUCTION
1.1
INVENTORY MANAGEMENT
Reduction of inventories is the main reason that companies have sought alternative inventory
management methods. The use of smaller batches leads to the need for reduced inventory at any
particular point in the production process. Cash flow is improved due to less capital investment in
inventory. Less inventory leads to savings in other areas as well, such as smaller space requirements,
decreased materials handling costs, decreased record keeping costs, decreased insurance and tax
obligations, and less scrap and obsolescence (Moore, 1998). Effective Inventory Management thus
enables an organization to meet or exceed customer expectations of product availability while
maximizing net profits or minimizing costs.
Successful inventory management involves balancing the costs of inventory (Hedrick, 2001). Many
small business owners fail to appreciate fully the true costs of carrying inventory, which include not
only direct costs of storage, insurance and taxes, but also the cost of money tied up in inventory. The
business owners’ other concerns regarding inventory, apart from deciding between too much inventory
and not enough, are listed below:
(1) Maintaining a wide assortment of stock -- but not spreading the rapidly moving ones too thin;
(2) Increasing inventory turnover -- but not sacrificing the service level;
(3) Keeping stock low -- but not sacrificing service or performance;
(4) Obtaining lower prices by making volume purchases -- but not ending up with slow-moving
inventory;
(5) Having an adequate inventory on hand -- but not getting caught with obsolete items.
The degree of success in addressing these concerns is easier to gauge for some than for others. For
example, computing the inventory turnover ratio is a simple measure of managerial performance. This
value gives a rough guideline by which managers can set goals and evaluate performance. At the same
time, it must be realized that the turnover rate varies with the function of inventory, the type of
business, and how the ratio is calculated
Inventory decisions are means by which inventories are managed. Inventories exist at every stage of
the supply chain as either raw material, semi-finished or finished goods. They can also be in-process
between locations. Their primary purpose is to buffer against any uncertainty that might exist in the
supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value,
their efficient management is critical in supply chain operations.
In order to facilitate simplicity, uniformity and flexibility in placing orders for supply of spare parts
from the regional warehouses, a well organized system should be in vogue. Orders are classified into
various “order types” and a standard flow is maintained so as to make parts available at end user
location in minimum time and optimum cost.
Monthly order and “Vehicle off road” (VOR) order are the two types of orders given by the dealers.
As per the provisions of the software provided by a leading automobile manufacturing company, order
processing after receipt at the warehouses has the following steps:
(1) Order is registered on website wherein correctness of part numbers is automatically verified.
(2) Availability of road permit is checked.
(3) Allocation through system for stocked parts.
(4) Pick list generation.
(5) Picking and packing of spare parts as per pick list and feedback to system.
(6) Generation of delivery note and shipment.
(7) Dispatch of parts through recommended transporter.
(8) Generation of invoice.

3. (9) Movement of parts consignment from warehouse to customer location.
Monthly order: Fine tuned orders based on consumption pattern needs to be sent punctually to the
warehouses of the dealer, helping him achieve fill rates consistently. Excellent availability of spares is
an indispensable prerequisite for obtaining a good rating from the parent company. Monthly order
consists of two categories: (1) fixed order part and (2) variable order part. A fixed order for each
channel partner based on ordering pattern, the previous year needs to be worked out. It implies that the
dealer’s fixed order will be unique to his facility, aptly reflecting his consumption pattern the previous
year. The fixed order value should be at least 40% of the monthly average target.
Dealers can place orders on their routine requirements for the month. These are the well planned stock
orders and a monthly order for a particular month must be sent to corresponding regional warehouse
latest by 10th of the month (in most dealerships). These orders are generally valid for 90 days from the
date of registration of the order.
The following list of information regarding monthly order is usually provided to the dealer by the
parent company.
(1) Value of monthly order to be commensurate with prorate target for the month.
(2) Entire range of the parts to be covered as far as possible in order to ensure optimum
availability of parts.
(3) Order need to be registered on website as per standard procedure.
(4) Reference to be made to fast moving item list or order pad as supplied by the parent
company ordering.
(5) Road permit availability must be ensured at the corresponding regional warehouse.
(6) Availability of sufficient funds to be ensured in customer payer code account.
“Vehicle off road” order specially caters to the need of the exigency requirements i.e. when vehicle is
physically off-road. Order processing and the dispatch of material are done on priority and through
courier service only.
1.2
MARKET RESEARCH
An extensive market research spanning a month was conducted at Chennai involving all leading two,
three, and four wheeler automobile dealers who represent Indian and multinational automobile
manufacturing companies. A customer requirement form was devised prior to the conduction of the
market research. The objective was to identify the features and discrepancies of existing inventory
management software systems and to obtain suggestions, complaints of the direct users and dealers
regarding the same.
Information regarding (1) the mode of placing inventory orders, (2) the platform of development of the
software, (3) the complexity of the software with regard to forms and windows, and (4) the detailed
description of the software requirements were obtained.
Views of the user regarding (1) user friendliness of the software, (2) knowledge gap with the features
provided in the software, and (3) whether the features exceeded the requirements or some features are
missing, were obtained.
Feedbacks from the dealers were obtained regarding (1) their suggestions regarding the software to the
parent company and (2) their complaints on the software to the parent company.
The inventory software user manuals of different companies were analysed.
The research of the existing software systems revealed some discrepancies of the software systems
provided from the manufacturing companies like (1) placing inventory orders through the courier
using compact discs containing the details of the order, which is time consuming, (2) feeding the
inputs of the order was via a spreadsheet which requires the user remember or lookup to hard-coded
inventory numbers (3) requirement to supply the discount information irrespective of the dealers

4. interest to furnish a discount during billing, (4) absence of an inventory catalogue forcing the user to
remember the hard coded inventory name/number, (5) presenting the inventory management software
in a website, which adds network and server problems and (6) asking the user to enter only 10
numbers of inventories at a time of ordering.
2
QUALITY FUNCTION DEPLOYMENT (QFD)
Quality function deployment (QFD) is an effective planning tool methodology which translates the
voice of the customer in to specific requirements. It is a disciplined approach to product design,
engineering, and production and provides in depth evaluation of a product (Besterfield, 2005). The
QFD chart is developed taking into account the customer requirements like user friendliness,
accessibility, usability, navigation keys etc. Grades are awarded based on the ability of the software to
satisfy the requirements. ‘S’ signifies strong relationship, ‘M’ signifies medium relationship, ‘W’
signifies weak relationship between the variables. If no relationship really exists a hyphen (-) is used
The competitive assessment matrix of the QFD chart brings the ability of the competitors to provide
for a particular requirement of a customer with a particular technical descriptor in terms of a numeric
value from 1 to 10. Prioritization of technical descriptors and customer requirements defines the
capacity of a software provider to provide a particular requirement of customer. The score is awarded
based on the views of the customer. Target values are devised to achieve a particular requirement of a
customer in terms of numeric value. The table 1 presents the theory discussed in an elaborate manner.
After the analysis of the QFD chart Visual Basic was chosen as the development environment and
Microsoft Access as the database. Visual Basic offers the desirable features like (1) short development
time, (2) many features in the database and Internet areas like ADO, DHTML applications and web
classes, and (3) compatibility with the Windows operating system, which is the common platform
found among almost all dealer firms. Microsoft Access offers user-friendly environment for the
database integration into the visual basic interface.
3
SOFTWARE
The distinct features of the software are given below:
The current stock in hand feature of the software provides the dealer with the knowledge of the current
stock of the particular inventory at the warehouse. The feature enables the dealer to place the optimal
order for the inventory at the optimal time, thereby enhancing the accuracy of forecasting the
requirement of a particular inventory. The Economic Order Quantity (EOQ) is essentially an
accounting formula that determines the point at which the combination of order costs and inventory
carrying costs are the least. Reorder Point (ROP) is the optimal point of time at which an order for a
particular inventory may be placed.
The bin location feature of the software system enables the user to locate the inventory at the ware
house, saving much of the business time. The feature helps the dealer to provide quick and reliable
service to the customer. Over a period of time the location of an inventory could be changed owing to
practical circumstances, this is taken into consideration and a form to update the current bin location is
also provided.
Multiple search types help in the search for an inventory from the database, at the time of placing
order, could be either through the knowledge of the inventory number or name. This adds flexibility to
the system as this does not demand the user to remember complex alphanumeric numbers. The system
provides the user with the flexibility to choose the search type with the help of radio button controls.
An integrated module comprising the inventory ordering system and the billing system is provided to
the user. This dismisses the additional need of software for printing the purchase details of the

5. customer of the dealer. Cost in purchasing new software for printing, maintaining of the same is totally
absent with the employment of the software system.
Figure 1 shows the main form, which forms the hub of all activities performed on the software. This
form contains six command buttons labeled Ordering Inventory, Add new entry, Edit quantity, Billing,
Bin location, Exit.
The “Ordering inventory” module is to enable the dealer to place inventory order to the parent
company. The purpose is solved with the ORDER BASKET form, shown in Figure 2, INVENTORY
SELECTING form, shown in Figure 3. The inventory order is e-mailed with the aid of Microsoft
Outlook Express.
The “Add new entry” module of the software is to facilitate the addition of a new inventory to the
database. The form is shown in Figure 4. The module collects details such as the inventory name,
number, bin location and adds it to the database of inventory at the warehouse.
The “edit quantity”, module is to provide the dealer with the knowledge of the current stock of a
particular inventory. Two distinct parameters, price and quantity, of the inventory at the database can
be modified using the module. The form is shown in Figure 5.
The “inventory billing” module helps to provide the knowledge of the current stock in hand. The
details of the purchase of the customer are billed by the billing module. The Figure 6 shows the
Inventory billing form.
The “Bin location” feature, Figure 7, locates the inventory at the warehouse with the knowledge of the
product id of the particular inventory. Initially the bin location is entered along with the entry of the
new product. This knowledge is displayed in the inventory ordering module and also the billing
module. The feature saves a lot of time in the searching of a particular inventory in real time.
The software has been demonstrated to different dealers and the actual users were also asked to
explore it.
4
CONCLUSION
The Automobile dealer Inventory management software is a sophisticated, reliable software tool for
automobile dealers to order inventories and to maintain inventory database. This software dynamically
updates the inventory in hand through the Billing module. The software is simple to work without
complex forms and icons. The software is very easy to learn and so even a layman can work with ease.
The software takes minimum loading time.
The possibility for errors in the data entry operations are few as input validation code is provided with
every data entry control. Since dealers can place their orders through on-line this software eliminates
the need of the conventional system of placing orders. The software ensures optimal utilization of
inventory and reduces inventory wastage. But this requires efficient management in the Dealership.
This software has multiple searching facilities to select spare parts while placing orders or billing.
The benefits of the software can be summarized as Improved forecast accuracy, Improved planning
and scheduling capabilities, Increased asset utilization, Enhanced customer satisfaction, Reduced
volume of errors and exception, Reduced time in locating the inventory. The software
comprehensively solves the necessary problems of an automobile dealer with regard to the inventory
management. The necessary objective of the software is met.
The software’s potentiality to address the challenging issues regarding inventory control has earned
the sincere interests of automobile dealers. The demonstration of the software was well received and
recognised.

6. REFERENCES
Francesco, B. (2003), “Programming Microsoft Visual Basic 6.0”, WP Publishers and Distributors
Bester field D.H. (2005), “Total Quality Management”, Pierson Education
Hedrick, F.D. (2001), “Inventory Management”, SBA Publications
http:www.kmworld.com knowledgemanagement
Moore, P.G. (1998), “Basic Operational Research”, Sir Isaac Pitman Sons Ltd.
User manual, Inventory Management Software, HYUNDAI MOTORS
User manual, Inventory Management Software, TATA MOTORS
User manual, Inventory Management Software, EASWARI MOTORS
User manual, Inventory Management Software, MAHINDRA MOTORS
Wilkes, F.M. (1987), “Elements of Operational Research”, Tata-Mcgraw Hill
Wood, F. R. (1995), “Forecasting and planning”, Sanon House Limited

7. Programming
Language
Database Server
Operating System
Primary
Java
Macromedia
Flash
Visual Basic
SQL Server
MS access
Oracle
MS-Dos
Windows
Linux
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S
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W
W
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S
M
3
3
4
4
3
3
4
4
3
3
4
3
3
3
4
3
3
4
3
3
2
4
3
3
4
3
4
2
W
S
S
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S
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4
3
3
4
M
W
-
S
S
-
M
S
-
S
S
-
M
M
M
M
M
W
S
S
S
M
W
-
S
S
-
S
S
-
4
5
4
3
4
4
4
4
1
3
4
1
W
S
S
S
-
-
-
-
-
-
4
3
3
3
S
W
0
M
S
5
M
S
0
M
S
0
M
0
M
0
S
5
M
W
0
S
S
5
S
S
0
4
5
4
4
3
4
3
4
0
5
0
0
0
0
5
0
5
0
0
0
0
5
0
0
5
0
5
0
0
9
0
1
5
6
0
5
0
0
1
5
6
0
8
Our product
Product A
Product B
Product C
3
2
7
Absolute Weight
226
630
482
576
225
26
9
543
172
690
657
Relative Weight
385
963
814
924
489
41
6
864
288
1110
1074
Secondary
W
Primary
C,C++
Secondary
Additional Features
User
Friendliness
No Data
Loss
Backup to Secondary
Storage Devices
Spare parts Database
Reference Number
Accessibility
Usability
Navigation Keys
Form Presentation
Searching Methods
Recent Activity
Display
Financial Year Based
Multiple Accounts
Current Stock in Hand
Interchangeability
Form
ROQ,MOQ
Customized Controls
Our Product
Hyundai
Technical
DMS
Competitive
Mahindra
Assessment
DMS
Honda DMS
Degree of Technical difficulty
Table 1. Adding prioritized technical descriptors to the house of quality
5
0
Customer
competitive
Assessment

8. Figure 1. opening form
Figure 3. Selecting Inventory form
with multiple search types and
current stock in hand
Figure 2. Order basket form
Figure 4. Enter new product form

9. Figure 5. Edit Quantity/Price form
Figure 7. Bin Location Form
Figure 6. Billing inventory form