SPREADSHEET MANAGEMNET – INVENTORY CONTROL OF FABRIC STORE

INTRODUCTION

'International Cloth Shop' is located in a busy market area in the town of Gulberg in Lahore. The shop
opened around 8 years ago in 2006 selling unstitched fabric of different materials and designs.

The owner aims to make a 40% profit each quarter in order to pay the employees, pay the premises rent
and buy further stock for the next quarter.

Each season, every brand delivers about 30 pieces from their collection along with their catalogues. In
total there are about 450 different pieces of cloth in the shop.
They also aim to keep their inventory levels updated and adjusted by reviewing the sales quarterly and
yearly, though this task is done manually.

The shop orders unstitched cloth from 15 brands, out of which four are well-known, major ones in the
country, with prices ranging from Rs. 1500 to Rs. 4000 for a single 2 piece suit. Every customer buys a
different length of cloth so the prices can vary accordingly. Prices also vary by the type and amount of
handiwork done on the fabric. A negotiable discount is usually available if someone makes a purchase of
more than Rs. 4000.

Apart from the owner, 5 other employees handle customers while one sits at the point of sale terminal.

The organizational structure is very simple since there aren’t many employees. The owner acts as the
manager and is responsible for the administrative functions, inventory control, and promotions. He also
liaises with the product suppliers to ensure the inventory has latest fabric.
The other 5 employees will handle a section of the shop each and deal with customers who come there.

HOW THE CURRENT SYSTEM WORKS

The unstitched pieces are kept over 5 areas in shelves each of which has approximately 120 pieces of
fabric. There are 15 brands that supply unstitched fabrics to the store, so there are on average, 40
pieces from each brand. New fabric pieces arrive four times a years, depending on the season, in the
months of January, April, July and October.

At the moment, all records about the fabrics are kept in a register maintained by two people. The
registers have the fabric code, its length, brand, fabric material, number of pieces in a set
(one/two/three piece suits), colours supplied, purchase price, sale price, number of fabric pieces
received and the date it was received by the shop. For example, a record for one fabric piece received
would look like this:

Code Length Brand Material No. of Colours Purchase Sale No. of Date of
(meters) pieces price price sets reception
in set
N0011 50m Nishaat Cotton 1 Yellow Rs. 750 Rs. 900 2 3/10/2014
N0012 50m Nishaat Lawn 2 Red Rs. 1500 Rs. 2 3/10/2014
2100

Student Number |140268571 1

Fabric of one kind will arrive as one large piece of cloth sufficient enough to be cut into enough pieces of
varying lengths (as the customers require) to provide for about 20 customers. Therefore, only one piece
of a particular design in a particular colour will be present. Thus the quantity of pieces of one particular
kind stocked need not be recorded, but their measurements do.

Customers either choose what to buy by looking at the textile on display, or they spend time browsing
through catalogues sent by brands and then choose a fabric they want.

When a certain length of a fabric is sold, no changes are made to its pertaining record in the register.
Details of the sold items are written on a piece of paper, a copy of which is given to the customer (the
bill receipt).

Since there is a massive variety of fabric designs and colours, the shop doesn’t keep track of stock levels
for reordering. For example, if they run out of a particular colour/design from one brand, there will very
likely be another brand with something similar for the customers to buy. Some customers’ choices may
not be affected by this but it does affect those who prefer to buy a particular brand.

Sometimes, the staff simply does a visual scan of shelves to see which brand/design/colour of fabric
seems to be selling more and is on the verge of selling out soon so as to reorder it from the respective
supplier.

Problems with the Current System

As far as efficiency is concerned, the current system has a number of problems.

Firstly, the manual listing of products is in itself a time consuming task, especially if a huge batch is
delivered at once. This also involves the possibility of human error where the person writing may write
wrongly or miss writing a product’s record.

Sometimes, there may not be anyone available to do the stock taking when stock arrives. Records of
that batch of products may not be written down due to forgetting.

Also, when a customer chooses a fabric from the catalogue, employees have to rely on their memory to
tell the customer if a particular piece has gone out of stock thus the inventory is not interacting with the
sales of the products. The shop has no immediate way of conducting analysis to find what brand or what
design they are selling more or what product is unpopular and which needs to be restocked.

Physical means of recording data (registers) can easily be destroyed by fire, water or they could even be
lost. Maintaining a backup is obviously very time consuming and cumbersome in this case (too much
paperwork).

The amount of staff employed (five) is also quite low considering the fact that when a lot of customers
happen to come, a single person would have to look for a number of products manually and take up the
customers’ time – something they won’t be very happy about.

Student Number |140268571 2

The shop, with their manual system, doesn’t seem to keep track of the time of sales either. No analysis
is done on ‘busy days’. Manually, it is extremely hard to do. Keeping track would help them to at least
hire more staff for the busy days but that would come at the cost of increased employee wages.

When calculating sales and profits, all the mathematics is done on paper with a calculator. This again
comes with the problem human error and inaccuracy.

Overall, here the manual inventory control system isn’t as efficient as a shop with such a high level of
stock should have and a computerized database system would help improve the quality and ease with
which the inventory system could be maintained.

RECOMMENDATION

In order for the shop to improve their inventory record keeping system, a simple spreadsheet
application will suffice. Since they are not a very huge business and their records are restricted to
storing cloth details, monthly sales, remaining length etc., there is no need for a custom built software
since a basic yet very functional software is available off the shelf. This spreadsheet software would give
them enough capability to enter records, do calculations on them, know when stock level is very low
(formatting on ‘reorder’ field) and produce charts and graphs to represent and analyse the data
graphically.

The recommended way to changeover to the spreadsheet system would be a direct implementation
strategy. This would mean an instant conversion to the more efficient system by which the shop can
start maintaining inventory records and serving their customers more adeptly. Data duplication will be
reduced to a very minimum as will input and calculation errors. The old manual system would be
abandoned completely as running both systems together will not only increase the record keeping work
load and unnecessary data duplication but also delay the complete implementation of the new system.

A problem that staff may worry about adapting to the sudden change from a manual system to the
computerized one and not being able to use the spreadsheet competently. Adapting to the new system
is only a matter of getting used to it which the staff can achieve if they work on it for a week. And while
the interface and feature of the spreadsheet are very user friendly, the staff can still take their time
getting to know the system properly. A suitable time to start working on the new system would be
during a season when a large amount of customers aren’t coming every day. This way, they’ll be able to
test the system themselves for a good one month and acclimatize themselves to it enough to use it
proficiently when new stock and more customers start to arrive by the next season.

Thus, a direct changeover to a spreadsheet software is recommended to the shop at a time when their
work load would be low and they can take enough time to familiarize themselves as much as possible
with the new system.

Basic Formulae Involved in the System:

The inventory system has the following basic calculations that need to be done to keep track of the
inventory.

Student Number |140268571 3

Sale Price = Cost Price + (Cost Price*0.4) (in order to sell fabric at 40% of the price originally bought for)

Total Sale (for one fabric) = Sale Price*Total length of fabric sold

Remaining length = Original Measurement – length sold

Profit = Total Sale – (Original Measurement*Cost per meter)

Spreadsheet Design:

There are three worksheets in this spreadsheet design. The first one, ‘Stock Details’, simply lists out all
the products and their details including the calculated sale price. The formula shown in the formula bar
determines which brand name to fetch based on the product code.

The second worksheet keeps track of the length of each product sold, the remaining length and if the
fabric needs to be restocked. It also calculates the profit or loss each product is showing. An IF condition
is put in the Reorder column to have the field show ‘Reorder’ if the length of a product is equal to or
falls below 10meters. The reorder field is also formatted to highlight a cell with gray background and red
font to make it immediately apparent to the user which product needs restocking. The ‘item code’,
‘Designer’ and ‘Measurement’ fields are imported from the worksheet above.

Once a particular length of a fabric is sold, the user increments the value in the ‘No. of Sales’ and ‘Total
length sold’ fields which updates the rest of the dependent fields.

Student Number |140268571 4

The last worksheet has calculations for reports and charts.

The SUMIF formula on right

calculates the total number of sales
the shop had for each brand. It sums
the number of sales, which in
essence is the number of customers
who bought the product, from the
Sales sheet and displays it according
to the brand name.

The formula on the left calculates the total profit each brand made
for the shop. The SUMIF condition
allows it to sum all profit values in
the Sales sheet which correspond
to the brand in the Brand field. A
zero is displayed if there is a loss.
This table on right filters the No. of
sales column to show products
with more than 20 sales.

Data Validation:

Field types are set in accord to whether

they are going to contain text or numbers.

For example, in this following case, if the user enters text

in the measurements field, the validation check makes an
error message appear.

Student Number |140268571 5

The validation on right makes the user
choose from a list specified in the
validation settings so they cannot enter
any other irrelevant data.

Reports:

By using the tables in the third worksheet, the following charts were produced.

Student Number |140268571 6

Student Number |140268571 7