Problem Solution: Kuiper Leda Kuiper Leda Incorporated (KL) is an electronic components manufacturer based in The Republic of Novamia. The company specializes in the production of Electronic Control Units (ECU) as well as Radio Frequency Identification Device (RFID Tags) for the automobile industry. Currently, they are a relatively small company that focuses on the quality of their product and delivery responsiveness. KL is looking to better control their inventory and expand their customer base. Midland Motors, a large and well-known original equipment manufacturer, has given KL an opportunity to achieve these goals. Midland has chosen KL to be the primary supplier for all of their ECU's and RFID Tags. Midland Motors has signed a year-long contract with KL for 250,000 ECU's and 35,000 RFID Tags to be evenly distributed in the upcoming year. Since Midland Motor's order exceeds KL's daily capacity, KL must now reorganize their structure to increase capacity. They must also consider and/or decide whether it's better to outsource the devices or some of its components. Situation Analysis Issue and Opportunity Identification Midland Motors is a large company that has a reputation of keeping close and long-lasting relationships with their vendors. For KL it would be an unwise decision to turn their order down. After accepting Midland's order, KL is first faced with the decision to manufacture everything in house or to outsource in order to meet the demand of their new client. One huge issue is the lack of a structured process. With an order this important, KL needs to develop a system that will allow them to take orders from other customers as well as meet the daily/weekly output of ECU's and RFID Tags for Midland Motors. The next decision would be to create and implement an inventory system that will allow KL to track their inventory from when it arrives at the door to the point of shipment to the client. Currently, KL has no set system and has high holding costs for their inventory. This is an excellent time for KL to look into implementing a Just In Time (JIT) system into their daily operations. Since the contract with Midland Motors is for at least one year, they have a forecasted number to work with. Midland Motors is expecting monthly shipments from KL, this gives KL the opportunity to plan and forecast the inventory needed. Of course, they also have to keep in mind that they will still have to be able to fill orders from other clients that have previously placed orders or even new customers.
We will also be tracking down direct verification of inventory that is held by public warehouses or outside keepers. Auditors will think through Costco’s actions for assessing warehouse’s performance, internal auditor’s report on warehouse’s internal control, and reconcile Costco’s record of inventory to warehouse’s statement. We will also account for any crack in receiving and shipping records. Auditors will test for appropriate authorization for inventory purchase, obtain purchase journals linked to vendor’s accounts, receiving reports and purchase orders. We will also review right of entry to accounting system linked to inventory to decide relevance of system access, review relevance of inventory write-offs and track the moving of inventory from one warehouse to receiving of the other warehouse.
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... ... middle of paper ... ... 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.
Burns Corporation is an auto corporation that consists of 24 dealerships selling foreign automobiles in the United States. Burns has experienced an increase in their inventory, which is becoming costly and cutting into profits. Inventory costs total approximately 300 million dollars with a 3% finance charge. Recently, however, inventory costs have peaked at 360 million dollars and finance charges have reached approximately 750 thousand dollars monthly. As inventory grows due to misalignment of sales and merchandise ordering, so does the need for more accurate forecasting models. The manufactures have issued a "turn and earn" approach that affects how dealerships will be receiving their inventory. This change states that shipments will be based on inventory. The only way new models will be received is when other models are sold. Burns needs an analysis model that will assist them in future inventory decisions. The development of this model and what is should entail seems to be the main priority.
The company has a very good inventory control system. After they are able to locate good quality suppliers that are able to meet the demand of the company, they then strive to maintain those relationships. They have systems in place to forecast their future needs and then have set out to be able to maintain a supply on-site so they can meet the demands and not run out of the product. They also need to make sure that they are able to store the materials so that they are able to maintain the quality that the company needs.
Inventory management has traditionally been considered as a necessary resource that every company needed. Its primary purpose was to evaluate and control inventory from the raw material level, through the production process and control stage, to the final out-door delivery. These older models of inventory management had several issues, such as inefficient control system, long cycle time, and bureaucratic process. Beginning in the late 1980s, many corporate businesses became deeply interested in developing new inventory management system that will reduce operation cost and expand market chare. Today, the business world is still improving its inventory system. The most effective systems are now not just count products and manage production schedule, but obtain lower prices by making large purchases, and increase inventory turnover. Today, forward-looking corporations build their serious efforts at inventory management systems through implementing new technologies, involved digitization, Internet, high-speed data network, and other e-sources that became available after business outsourcing and globalization.
In addition, on day 105, the reorder quantity was 13,200. This approach was effective as it increased the number of inventory kits available for production. In total, the company used $2,059,000 to increase its inventory levels. The increased inventory levels and the readjustments of reorder points enabled the factory to increase the number of jobs accepted each day as well as to reduce the number of jobs waiting for kits. In addition, there was a high number of kits queued at station one from day 80 which was accompanied by increased utilization of station one. Besides, we were able to reduce the lead time for all the orders and this enabled the company to increase its revenues.
Analysis & Recommendation: Zara’s main strategy is the ability to respond very quickly to the demands of target customers which called for identifying trends of the customer in advance. The company has been able to identify the trends and meet the demand with the help of its autonomously organized structure and its effective value chain systems. The present system followed by Zara has been very effective and very easy to maintain, which as a result has persuaded the company to continue without any change in the present system so far. The problem that Zara faces right now is that the system that they use, P-O-S (Point of Sale terminals), runs on DOS which Microsoft does not support anymore and any hardware change in the POS terminal will not be compatible with the current POS software. Although the sense of urgency for the change may not be that high, investing in IT infrastructure is a must as MS Dos is an obsolete technology and there is no contract or guarantee from their POS terminal vendor that they will continue supplying the same terminal with out much changes in the hardware for any specific period of time, therefore change is unavoidable. The other main issue that Zara faces is that the stores don’t share inventory information electronically and hence inventory management becomes highly difficult and manual. The decision making process is based on the judgment of employees throughout the company instead of relying on a small set of decision makers; the majority of the decisions were made by store managers and as a result they placed orders for the items rather than simply accepting and displaying what headquarters decided to send them.
Target Corporation needs to increase product availability based on the customer needs using a forecasting and supply chain
In the competitive environment, it is necessary for moving products involves reception of products at an intermediate location, store, repackage, clear customs and transport to final destination. The other factor in the supply chain logistics is speed given information flows fast in the internet era. The customer expects everything quick accustomed to the instant status access to the information. With the real time inventory, customer expects the location of the product, it is next scheduled movement and the final delivery schedule.
So it’s important to research the product and the vendor to make certain that you select the right system for your business. You’ve got to have a system that fully integrates all aspects of running your manufacturing business, offers advanced features and options but is intuitive and easy to use so employees can grasp hold quickly, and adapts to the way you do business rather than forcing you to adapt to the software.
Sethi, S, Yan, H, & Zhang, H. (2005) Inventory And Supply Chain Management With Forecast Updates New York, NY : Springer.
Inventory management is a method through, which a business handles tangible resources and materials to ensure availability of resources for use. It is a collection of interdisciplinary processes including a full circle from the demand forecasting, supply chain management, inventory control and reverse logistics. Inventory management is the optimization of inventories of manufactured goods, work in progress, and raw materials. According to Doucette (2001) inventory management can be challenging at times; however, the need for effective inventory management is largely seeing more as a necessity than a mere trend when customer satisfaction and service have become a prime reason for a business to stand apart from its competition. For example, Wal-Mart’s inventory management is one of the biggest contributors to the success of the company;
Since UPS’s establishment, the company aims to provide “best service and lowest rates.” UPS aims to have the best service through satisfying their customers with timely and accurate shipments. The DIAD tracks information through the scannable bar-coded label and gives the drivers the best delivery route. The package tracking system gives the customers real time feedback to package whereabouts. The Web-based Post Sales Order Management System (OMS) manages global service orders and inventory for critical parts fulfillment. High-tech electronics, aerospace, medical, and other companies can receive critical packages quickly. The system allows for orders to be placed online and track parts from the warehouse to the final user. The customer is informed on each shipment milestone and changes in delivery. The UPS Supply Chain Solution allows for other subscribing companies to use UPS’s systems and infrastructure to handle their deliveries at a cheaper rate than on their own systems. Thus, the company meets their goal to offer the lowest
This system connects, accumulates, processesas well as provides imperative information to all parties thus enhancing continuity in the procurement process. However, if valid output is to be expected, features as well as requirements of the procurement process must be compatible to current system technologies (Giner, et al, 2011). The harmonization of suppliers as enhanced through the adoption of electronic sourcing enables firms to readily identify new potential suppliers for specific needs when old suppliers` capabilities are in question. The adoption of E-tendering that supports sending requests of pricesand information to suppliers as well as receiving suppliers responses improves on procurement efficiencies as it leads to significant cost reductions thus leading to better procurement performance through cost savings.For this system to achieve desired results however,all users must beready and willing to adopt the new systemsso enable seamless adoption and consequently ensure optimal
Toyota has implemented many different systems such as performance monitoring software, the Just in time (JIT) inventory system, electronic quality control system, communication system and information system thought out their value chain which enable to make correct decision during the manufacturing process. They have identified that having large inventories of spares cost them extensive capital and they have implemented the Just in time (JIT) inventory system which advices the suppliers the exact spares that the product line required and provides a time frame. Toyota adopted continuous learning and embraces change allowing their staff to research and innovation (Toyota