The document discusses efforts by the IT department to reduce stock levels at an auto parts company between August 2005 and December 2006. It finds that: 1) Total stock was reduced by KD 90,000, but efforts by the IT department specifically reduced controlled stock items by KD 30,000. 2) Focusing only on controlled items shows stock reductions of KD 110,000, more clearly demonstrating the impact of the IT measures introduced. 3) While stock was reduced, the full KD 110,000 reduction is not visible in financial reports due to stock valuations being merged and obsolete stock provisions.

1. Proof Of Stock Reduction
due to Sincere Efforts from IT
Department
Prepared by:
Ghassan Kabbara
December 19th 2006

2. Auto Car Parts Trend of Stock Value since
August 24th, 2005. (Excluding MC Stock)
COST OF STK
2000000
2020000
2040000
2060000
2080000
2100000
2120000
2140000
2160000
2180000
23/08/2005
06/09/2005
20/09/2005
04/10/2005
18/10/2005
01/11/2005
15/11/2005
29/11/2005
13/12/2005
27/12/2005
10/01/2006
24/01/2006
07/02/2006
21/02/2006
07/03/2006
21/03/2006
04/04/2006
18/04/2006
02/05/2006
16/05/2006
30/05/2006
13/06/2006
27/06/2006
11/07/2006
25/07/2006
08/08/2006
22/08/2006
05/09/2006
19/09/2006
03/10/2006
17/10/2006
31/10/2006
14/11/2006
28/11/2006
12/12/2006

3. Stock Position is being daily
monitored.
COSTOFSTK
2000000
2020000
2040000
2060000
2080000
2100000
2120000
2140000
2160000
2180000
23/08/2005
06/09/2005
20/09/2005
04/10/2005
18/10/2005
01/11/2005
15/11/2005
29/11/2005
13/12/2005
27/12/2005
10/01/2006
24/01/2006
07/02/2006
21/02/2006
07/03/2006
21/03/2006
04/04/2006
18/04/2006
02/05/2006
16/05/2006
30/05/2006
13/06/2006
27/06/2006
11/07/2006
25/07/2006
08/08/2006
22/08/2006
05/09/2006
19/09/2006
03/10/2006
17/10/2006
31/10/2006
14/11/2006
28/11/2006
12/12/2006
• As of August 24th
2005, Stock Value
was KD, 2,160,370
• As of December 17th
2006, Stock Value is
KD 2,070,102
• Over Net All Stock
has been reduced by
KD. 90,000

4. Net Stock Reduction Due to Efforts
is KD 30,000
COST OF STK
2000000
2020000
2040000
2060000
2080000
2100000
2120000
2140000
2160000
2180000
23/08/2005
06/09/2005
20/09/2005
04/10/2005
18/10/2005
01/11/2005
15/11/2005
29/11/2005
13/12/2005
27/12/2005
10/01/2006
24/01/2006
07/02/2006
21/02/2006
07/03/2006
21/03/2006
04/04/2006
18/04/2006
02/05/2006
16/05/2006
30/05/2006
13/06/2006
27/06/2006
11/07/2006
25/07/2006
08/08/2006
22/08/2006
05/09/2006
19/09/2006
03/10/2006
17/10/2006
31/10/2006
14/11/2006
28/11/2006
12/12/2006

5. How Stock Reduction was
achieved?
• 1st Step: Reprogrammed Application to Cater for
Maximum 3 months stock from previous 4 months stock.
(This was introduced after a thorough analysis of the
Inventory Data made available to me by the IT Dept.
Involved many simulations prior to implementation. )
• 2nd Step: Changing Bi-monthly Shipment of Stock from
supplier to Weekly Shipments for Replenishment Orders.
• 3rd Step: Introducing Controls in Application to minimize
Panic Orders, Monitor and Eliminate Back Orders.
• 4th Step: Keeping a Close watch of the Stock (utilizing
Utilities to provide me with alerts for abnormal events.)

6. Break Down of Stock for Auto Parts
Non Supplier
Items
OILS, Batteries,
Galco GAS
Local Purchase, Used
Those items that did not expereince an
Automated Stock Control.
Local Purchases are made by Warehouse
Controlled Stock
Those items Selected from 2004 Database
that have experienced over 12 months of
Stock Reduction

7. Controlled Stock
• Total Items 50,000 • The Stock has witnessed
a Net Reduction of
KD.90,000 but in reality
and due to our efforts KD
30,000 is reduced.KD
60,000 due to LP Used
Items(correction of Cost)
• It was only these
controlled stock items
that were being affected
by the Controls. The Non-
Supplier Items, we have
no control off and neither
the Local Purchases.
Controlled Stock
Those items Selected from 2004 Database
that have experienced over 12 months of
Stock Reduction

8. True Affect of Controlled Stock
Reduction
• Therefore in order to see
the True affect of the
Stock Reduction that has
occurred due to the
measures and controlled
introduced one has to
Focus on those
Controlled List.
• That is measure the
outcome (Stock
Reduction only for those
controlled 49220 Line
Items.)
Controlled Stock
Those items Selected from 2004 Database
that have experienced over 12 months of
Stock Reduction

9. Visual of Controlled Stock Reduction Vs Total Stock
Reduction
1,700,000
1,750,000
1,800,000
1,850,000
1,900,000
1,950,000
2,000,000
2,050,000
2,100,000
2,150,000
2,200,000
Controlled Stock 1,985,100 1,948,858 1,913,339 1,878,705 1,880,588 1,874,690
All Stock 2,158,058 2,117,002 2,109,810 2,094,602 2,089,481 2,077,102
21/08/05 31/12/05 31/07/06 30/09/06 13/11/06 18/12/06

10. Cumulative Stock Reduction
Months Vs Stock reduction
-
20,000
40,000
60,000
80,000
100,000
120,000
Cont Dec 36,241 71,760 106,395 104,511 110,410
All Stk Dec 41,056 48,248 63,456 68,577 80,956
4 11 13 15 16

11. Further Proof of Stock Reduction
for the Controlled Items.
• We have taken all those
Purchases and Sales at
Cost for the controlled
49220 items. Clearly you
can see that KD. 85,580
is being reduced.
• Please note that the
Purchases are measured
at last replacement Cost
and Sales are measured
at weighted average.
Hence we are not really
comparing apples-to-
apples.

12. Why this KD 110,000 Reduction
cannot be seen in Finance Reports.
• The reason we cannot see this
in our Financial Reports is
simply because in Finance
Stock Values are not broken
down and Auto Car Parts and
MCPP Parts are all merged
into one. Not to forget that
Obsolete Stock Provisioning
has been made in Finance
Records.
• This is a well known
Phenomena that arises
between Parts Dept and
Finance Dept. Each have their
reporting structures to serve
their purposes.

13. Summarizing …
• Efforts in the last 18 months have been
dedicated to Spare Parts Inventory
Management.
• The Challenge was that their was no
capture of Relevant data that could aid me
the introduction of the latest techniques in
Ordering. Not to Forget the Supplier
restrictions and interferences with our
Orders.

14. • Relevant Information I am referring to is
Measuring Lead Times of all Items,
Capture of Residual Stock, Capture of
Critical Data on items that are ordered
Manually and for the Sake of Urgent
Orders, etc…..

15. • Also not to forget that Local Purchases(
Consumables also contaminate the stock
position.)
• Recently Also the introduction of Items
purchased on Whole Sale ( such as Oils,
Batteries, Galco Gas, etc..). These items
are also beyond my control.

16. Thank You
• All Data Sources are available to our
auditors to double confirm the Figures that
I have referred to in this presentation.