Inventory Shortages Reduction by Developing an Enterprise Resource Planning (ERP) System: A Case Study of MMM Company

Abstract

This study aims to 1) examine the inventory management processes and handling of existing data, and 2) reduce inventory shortages by developing an enterprise resource planning system that facilitates data linkage and serves as a central data management hub. The main reason for the issues at MMM Company was the lack of a database management system; previously, records were kept on paper, and there was no adequate communication method, making misunderstandings in communication likely and errors in data storage possible due to inexperienced and unskilled workers. The population consisted of 18 samples at MMM Company who were involved in the information system. The study employed in-depth interviews and used tools such as cause and effect diagrams to illustrate inventory shortages issues, Additionally, the development of a database management system through a web application for enterprise resource planning included the design of process flowcharts and data flow diagrams.

The study found that after implementation, the company was able to reduce the processing and operation time from 13.25 minutes per transaction to 6.7 minutes per transaction by a decrease of 49.43%. In terms of inventory shortages, the company reduced the number from 31 stock-keeping units to 5 stock-keeping units by a decrease of 83.87%. Financially, the monthly cost of losses decreased from 570,500 baht to 23,000 baht by a reduction of 95.97%.