Before inventory productivity can be improved, one must take a careful and critical look at the specific business entity, which in this case is Austin Wood Products. In the case it stated that there is no way to know what is available in the storage room until you get there is a huge concern. There is usually a 50 percent chance of obtaining the needed lumber for a job, and this is interfering with productivity. In the area of inventory management, the purchasing professional should make explicit decisions. There are many things that the company must be aware of. Some things you must take into consideration are what to stock, how must to invest, and how much service to offer. In regards to what to stock, the purchasing professional, at the very minimum, must meet the requirements and needs of the manufacturer or distribution operation. Austin Wood Products failed to have any formal stock management technique in effect to take care of raw materials & done merchandise. The stock count is finished by hand & takes days. They weren't maintaining any stock record at all. The significance of demand conjointly was tough to foretell because it varied from year to successive. The metric was that the stock turnover that relates stock levels to the merchandise sales volume was turned numerous times every quarter. Austin Wood Products doesn't place a significant stress on maintaining correct inventory records. So, implementing an inventory control system can modernize the system. Once they develop and implement this inventory control system, inventory records are going to be upheld truthfully and that they will get the accurate standing of the inventory up-to-date. In order to maintain the steady continuous supply for production need...
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...ory holding costs, ordering costs, and shortage costs, and have a classification system for inventory items.
In conclusion, while reading the case study, I saw much disorganization throughout the company’s entire system. They did not have any formalized structure that was followed on a daily basis. I am really surprised that they have functioned this long in their disorganized workplace and work environment. I believe that if Austin Wood Products take these recommendations I have given, their day-to-day business will function much better and run more smoothly. In the long run, I hope that it is more effective and efficient in moving their products from the walls of their stockrooms (warehouses) to the hands of their customers.
1. W.C. Benton, Jr., 3rd Edition, “Purchasing and Supply Chain Management.” (2010). Text.