Trade Off Analysis
In order to analytically
determine if there is a benefit to converting from a manual tracking method
to an automated process, a trade off
analysis was conducted. A weighted
scoring method was utilized to
provide an ordinal ranking of important factors
impacting design alternatives. The
factors used in this
analysis were: cost, efficiency, accuracy, and
process time. Each factor could receive
a possible 10 points.
Cost is assumed to be the major
factor in determining the implementation of an automated
tracking system, and is given a 35% weighting
factor. Due to market factors and
economic feasibility,
businesses must demonstrate a cost savings in order
to justify the use of a new business practice.
It is
expected that a manual inventory tracking system
would be able to reach a constant, optimal level of
efficiency for salary dollars spent if warehouse workers
keep inventory sheets of all items in a warehouse
and input the data into a database each
day. Cost increases as inventory or
warehouse size increases and
the need for additional labor rises. On the other hand, an automated system may
not be feasible for a very
small warehouse that can be easily inventoried
for a minimum of labor dollars.
Manual
Tracking Automated
Tracking + + Time Increase
Personnel Cost Efficiency Cost Efficiency
Figure 17: Expected Cost/Efficiency
Profiles of Manual and Automated Tracking Systems
Figure 17
illustrates the expected cost profiles for manual and automated systems. The manual system
shows increasing cost with an increase in
personnel. As business expansion is
likely, warehouse space will
increase and labor dollars will follow in a
linear fashion. The automated system
shows an initial cost, a
maintenance cost and an update/replacement cost, as
a function of time. While initial costs
are expected to
exceed the average personnel cost of an optimal
manual system, the maintenance costs (including repair
and tag costs) will be lower than the
average labor costs of a manual system.
Efficiency
Efficiency is the second most
heavily weighted factor for determining the implementation of an
automated system over the manual method, and has
been given a 25% weighting. Efficiency
is the ease
with which the system reaches its goal for the
expended resources. Expected system
efficiency is also
illustrated in Figure 17. A manual tracking system can be optimized
with a finite number of personnel. A
point of diminishing returns will be reached
as an excessive number of personnel are used to track
warehouse contents. In this case, efficiency will likely decrease
and costs will be prohibitive. An
automated system will be expected to achieve a
constant efficiency, regardless of warehouse size or
content, exceeding that an optimal manual
system.
System accuracy is has been
weighted 20% for this trade off analysis.
While the automated
system is expected to achieve a greater overall
accuracy, both systems are expected to be comparable. The
automated system will excel when warehouse
inventory increases. As inventory
increases in a manual
system, the personnel increases necessary will
likely create accuracy problems. The
automated system
would maintain an accuracy percentage no
matter the inventory. Inaccuracies would
be expected in the tag
programming and during other human interaction. In this instance, accuracy could also be
illustrated as a
time related function. Often times, when filling orders, real time
accuracy is necessary when extending
estimates. The
manual system would not be able to achieve near real-time accuracy as shown in
Figure 18.
Accuracy % Increase
Inventory Automated System Efficiency Manual System
Figure 18: Expected Accuracy Profiles
of Manual and
Automated Tracking Systems
The system process time refers
to the time associated with the ability to access up-to-date
warehouse inventory, and has been weighted
20%. As businesses increase their
presence in the global
economy, particularly with the Internet Age, it
becomes more and more relevant for logistic personnel to
have access to up-to-the-minute
inventory. With the use of a manual
tracking system, regular database up
dates may average 3-4 hour intervals for an
optimized system. An automated system
would allow near
real-time inventory. As a result, automating the inventory process
can improve a company’s ability to meet
customer demands.
Trade Off
Calculation
Table
5 demonstrates the scoring method used to trade off performance factors of both
the
automated and manual inventory tracking methods.
|
|
Automated System |
Manual System |
|
||
|
Factor |
Score |
Weighted |
Score |
Weighted |
Wt
% |
|
|
|
|
|
|
|
|
Cost |
10 |
3.5 |
9 |
3.15 |
0.35 |
|
Efficiency |
10 |
2.5 |
8 |
2 |
0.25 |
|
Accuracy |
9 |
1.8 |
8 |
1.6 |
0.20 |
|
Process Time |
10 |
2.0 |
7 |
1.4 |
0.20 |
|
|
|
|
|
|
|
|
Total |
39 |
9.8 |
32 |
8.25 |
1.0 |
Table 5: Weighted Trade Off Calculation
The trade off quantitatively demonstrates
the desirability of implementing an automated tracking system
over a manual system. When considering multiple factors, such as
cost, efficiency, accuracy, and process
time, the automated system scores a 9.8
compared to the manual system’s 8.25.
With the use of an
automated system for inventory tracking, a company
will be able to save money over the life of the process
due to hardware/labor savings, and improved
efficiency, even with expected expansion.
In addition, the
company will be able to save time, and meet
customer needs in a timelier manner.
Conclusion
Automated inventory tracking system is
selected over a manual inventory tracking system.