University of San Jose-Recoletos

Magallanes Street, Cebu City

A Business System Improvement Project on inJoy Negosyong Bayan at Leon

Kilat St., Cebu City Branch Using Systems Engineering Approach

By:
Badilla, Sherrenne
Cabarrubias, Anna Marize
Caligner, Jelian
de Ama, Angelique Kirsten
Gonzales, Kim Theresa
Santillan, Jessa Mae
 I. COMPANY PROFILE

Fig. 1 Injoy branch at Leon Kilat St., Cebu City

Company Name: Injoy Negosyong Bayan

Date Established: Year 1995

Type of Business: Dealership/Distributor

Address: Gochan Bldg., Leon Kilat St., Cebu City, 6000 Cebu

Telephone/Fax Number: (032) 254-5357

(032) 254-7891

Name of the Owner: Doxo Ingredients Inc.

Email Address: injoyphilippines@yahoo.com

 Company Background

inJoy Negosyong Bayan has been a manufacturer of value-adding and cost-

effective flavorings and seasonings in the Philippines since the year 1995. They have

also been the leading supplier of food ingredients to the food processing industries

nationwide. The brand is manufactured by Doxo Ingredients Inc. which is originated at

Manila, Philippines.

inJoy is the brand with fast-growing customer demand and customer base

nationwide. Its products are the favorite and most preferred brand of many Filipinos who

own businesses such as cafes, juice and shake stands, restaurants, canteens, and ice

cream shops. The branch located at Gochan Bldg., Leon Kilat St., Cebu City is offering

services to its local customers who buy at their store. The branch is a distributor of the

inJoy products and offers a dealership business. They also deliver orders from South and

North side of Cebu. inJoy offers a wide variety of products from soft serve ice cream

premixes, shake and milk tea powder mixes, popcorn down to vending machines and

equipment. They also offer business packages that includes already the powder mixes,

machines, and equipment needed for a franchise.

inJoy will continue to launch many more great-tasting products in the future to help

achieve the dreams of every aspiring Filipino business owner. The company will

continuously be committed to their customers and business partners and actively

collaborate with them through consistently supplying quality products and providing the

best service and support.

 II. THE PROBLEM AND ITS SCOPE

Introduction

The emergence in the demand of food and drinks to the growing population in the

Philippines, which is attributed in the research report on the “Philippines Food and Drinks

Market: Emerging Opportunities”, widely brought business opportunities to every Filipino

entrepreneur. The demand for these products is high in such a thriving market that any

up-and-coming entrepreneur would consider to invest that will serve many Filipinos who

enjoy consuming flavored foods and drinks. Flavor trends in food continue to advance as

companies seek to meet changing customer tastes, expand into new consumer groups

and bring more advantage to brands in the face of high levels of brand competition.

There are many ways to effectively reach the wide range of market and provide

the products or services that accordingly suits to a particular consumer group. Some of

which is through distribution and dealership. Distributors are usually wholesalers who sell

to dealers wherein the goods they sell are purchased from the manufacturer. On the other

hand, the dealers are retailers who sell directly to the public wherein the goods they sell

are from the distributor.

inJoy is the brand with fast-growing customer demand and customer base

nationwide. The branch located at Leon Kilat St., Cebu City is a distributor of products

such as vendo drinks, flavored milk, milkshake powder, scramble powder, milktea

powder, soft serve ice cream premixes, flavor extracts, rice mix and other products. The

branch also offers dealership to interested customers which includes various business
packages such as vendo business package, milk shake business package, soft serve ice

cream business package and many more.

The proponents assess the current system practices of inJoy specifically on its

inventory system to identify the areas needed for improvement. These improvements are

carried out to determine the potential benefits the company will acquire at the end of the

study.
Statement of the problem

This study aims to assess the current inventory system of Injoy Negosyong Bayan at

Leon Kilat St., Cebu City branch that offers several product lines and services to their

customers. Specifically, this study aims to address the following:

1. What is the current inventory system of Injoy Negosyong Bayan branch?

2. Based on the data gathered, what systems improvement can be proposed?

3. What benefits can the company acquire from the proposed improvements?

Scope and Limitations

This study focuses on the system management practices of the Injoy Negosyong

Bayan branch located at Leon Kilat St., Cebu City specifically on the inventory system of

finished goods of the branch. The branch falls on the distributor-type of business since

they distribute and sell inJoy products to their dealers and walk-in customers.

The study limits on the products available in their store such as the vendo drinks,

flavored drinks, milk shake powders, scramble powders, milk tea powders, syrup,

noodles, soft serve ice cream premixes, gulaman, flavor extracts, sauce mix, popcorn

flavor, rice mix, lugaw mix, and other products. Vendo machines and equipment that

comprises a business package are not included.

The data gathered are basically based from the proponent’s observations and

interviews which were conducted for any clarifications and elaborations on the responses

from the subject of the study.

Problem Recognition

inJoy Negosyong Bayan is a branch that distributes inJoy products available for

their dealers and walk-in customers. Based from our interview, the store manager

identified that the main issue in their store is the inventory. Problems encountered by the

store specifically to its inventory are considered critical because it led to profit loss and

additional cost of the store. The proponents identified inventory issues and graphically

represent it through pareto chart to determine which problem contributes the most.

Figure 1. Pareto chart of Inventory issues

The figure above shows the inventory issues with their corresponding average rate

from the month of June up to July of this year 2019. The chart indicates that Excess

Inventory has the highest rate of 51%. The proponents chose to focus on this area since

it greatly contributes the most problem and needs to be addressed.

 Since the main problem is identified which is the Excess Inventory, the proponents

gathered data on the number of packs ordered by the company weekly and the sales

percentage of each products. In that, we can determine the products that are slow-moving

and fast-moving. Also, we can identify how much percentage falls into the excess

inventory. Below is the table for the sales percentage of each product.

Sales Percentage of Products

100%
90%
80%
70% 60% 60%
60% 70%
85% 80% 85%
50% 90% 90%
40%
30%
20%
10%
0%

Sales Percentage Difference Baseline

Figure 2. Sales Percentage of Each Products

As shown in the bar graph, the vendo drinks, milkshake powder, milktea powder,

soft serve ice cream premix, and flavor extracts are the products that are fast-moving.

This means that their weekly orders of 60 packs are consumed. On the other hand, other

products show a huge difference from its sales percentage versus the number of weekly

orders which is 60 packs. This leads to excess of the store’s inventory and will result to

additional cost.
III. PRESENT PROCESS STATE

START

Receiving of delivery
receipt

Checking the quantity

and quality of products
upon receiving of
supplies

Signing of the delivery

receipt

Recording the received

supplies into the
inventory log book

Storing of the supplies

into the storage room.

END

Figure 2. Current process of Receiving and Storing of Supplies

 Figure 2 shows the current process of receiving and storing the supplies of the

store. First, the store manager receives the receipt handed by the delivery man. The

manager then inspect the item in terms of quantity and the quality of the supplies. After,

the manager will sign the receipt. Each item then is recorded to the inventory log book

including the date of delivery and the person who received the item. Finally, the supplies

are brought to the storage room and are put into their designated places.
 IV. ROOT CAUSE ANALYSIS

After the main problem was identified, the proponents now use the fishbone

diagram to know the root causes of the problem.

Figure 3. Fishbone Diagram

The figure above shows the root cause analysis on the main problem which is the

excess inventory. One factor under method that causes excess inventory is the inaccurate

projection of demand or number of packs to be ordered which is due to inaccurate tracking

of inventory quantities available in the storage. This inaccurate tracking is caused by the

manual recording of inventory. Manual inventory system increases the possibility of

human error. There are instances that the worker forgot to record a transaction or

miscount the number of goods. Also, manual inventory system requires continuous

monitoring to ensure that each transaction is recorded and stocking levels of the products
are appropriate. Another cause is the company does not have any tool used for

forecasting method which would lead to inaccurate projection of orders, thus resulting to

an excess inventory.
 V. SYSTEMS DEVELOPMENT

1st Recommendation: Establish Reordering Point through MS Excel

Process

Product: Milkshake

Month of : June - July

# of Units
Sold 630

Date Units Expiration Cost of Goods Units Units Cost of Goods Inventory Safety Reordering
Purchased Purchased Date Price per Unit Purchased Sold Remaining Sold Value Stock Point

6/3/2019 60 09/03/2019 ₱ 120.00 ₱ 7,200.00 60 - ₱ 7,200.00 ₱ - 40 110

6/10/2019 90 09/10/2019 ₱ 120.00 ₱ 10,800.00 90 - ₱ 10,800.00 ₱ - 40 110

6/17/2019 60 09/17/2019 ₱ 120.00 ₱ 7,200.00 60 0 ₱ 7,200.00 ₱ - 40 110

6/24/2019 120 09/24/2019 ₱ 120.00 ₱ 14,400.00 120 0 ₱ 14,400.00 ₱ - 40 110

7/1/2019 60 10/01/2019 ₱ 120.00 ₱ 7,200.00 60 0 ₱ 7,200.00 ₱ - 40 110

7/8/2019 120 10/08/2019 ₱ 120.00 ₱ 14,400.00 120 0 ₱ 14,400.00 ₱ - 40 110

7/15/2019 120 10/15/2019 ₱ 120.00 ₱ 14,400.00 120 0 ₱ 14,400.00 ₱ - 40 110

7/22/2019 90 10/22/2019 ₱ 120.00 ₱ 10,800.00 - 90 ₱ - ₱10,800.00 40 110

720 ₱ 75,600.00 630 90 ₱ 75,600.00 ₱ - 880

Reordering Point Calculation:

Product: Milkshake

Average Daily Usage Maximum Daily Usage Average Lead Time in Days Maximum Lead Time in Days Safety Stock Reorder Point

10 11 7 10 40 110

Formula for the Reordering Point and Safety Stock Calculation:

Average sales per day = Sales quantity/ no. of days
Average lead time = Delivery Time/ no. of orders
Safety stock = (Maximum Daily usage x Maximum Lead time in Days)-(Average Daily Usage x Average Lead Time in Days)
Reordering Point = (Average Daily Usage x Average Lead Time in Days)+ Safety Stock
 VI. IMPLEMENTATION TIMELINE

Table 1: Implementation Timeline

Activities Begin End October November

Date Date Week 3 Week Week Week Week Week
4 5 1 2 3
Planning 10-14-19 10-19-19

Project 10-21-19 10-26-19

Proposal
Requirements 10-21-19 10-26-19
Document
Design 10-21-19 10-26-19
Document
Software 10-28-19 11-02-19
Installment
Orientation of 11-01-19 11-08-19
workers
Hands on 11-04-19 11-08-19
software
activity of
workers
Evaluation of 11-14-19 11-18-19
Workers
VII. COST-BENEFIT ANALYSIS

Proposal Benefits

 Accurately tracks the number of

stocks available

MS Excel Inventory Program  Accurately projects the number of

packs to be ordered

 Monitoring on the expiration dates

of the products

 Established replenishment rule on

the products