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.
...System (SMS). Knowing that the Harley-Davidson’s employees were not very susceptible to quick changes, SiL’k team made sure to employ company’s model to highlight People, Processes and Technology for any change initiatives. Additionally, company’s Technology decisions were differed to company’s Architecture Integration group to ensure all technical solutions will be compatible with existing Information Systems architecture. Last but not least, the team took an open communication approach and throughout the process, each party involved, shared their monthly updates as well as project newsletter that communicated objectives, activities and progress to the community. This was clearly an ultimate teams collaborative effort, which brought them all toward shared vision of the new process and activities, resulted in shareholder’s decision in favor of the new supplier.
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.
Regarding Ross Stores Inc.’s first issue, this organization needs to develop an electronic system to store their entire inventory. The inventory should be sorted by how much of a certain product each store has and which store has what item and by the category of each product. By having an electronic system for inventory in place, this will then reduce time for employees when giving information to customers on whether or not they have a certain product because they will not have to go physically to view the product. Not only will this create better customer satisfaction but it will also increase
...ory holding costs, ordering costs, and shortage costs, and have a classification system for inventory items.
Kuiper Leda lacks an effective Inventory Management to handle properly the increase in demand of stock and production. An inventory management plan would be capable of forecasting errors in production, client-required service levels, total lead time in manufacturing a unit or batch of the product, and demand priorities. Inventory control is a challenge currently because of the size of Midland Motor's order. In order to meet the demand the company needs to increase the inventory which increases the inventory costs. KL have an opportunity of using the Just - In - Time method of inventory control which eliminates waste by making the resources and labor available only in the time and amount required. It will help increase productivity, product quality and work performance while saving inventory costs for the company. (Curtin, 2008). Kuiper Leda also needs to keep in mind that they will still have to fill orders from other clients that have previously placed orders or even new customers.
Before the introduction of JIT, there were a lot of manufacturing defects in the system such as inventory problems, product defects, risen cost, large lot production, and delivery delays. Some other problems also included equipment breakdowns, and uneven production levels. The inventory problems included unused inventory that was unproductive and the extra effort of storing and managing it. To store inventory, it costs money called a Carrying Cost, which can be expensive. However, with the use of the JIT system, inventory costs can be reduced by as much as 50 percent if not more. For product defects, the manufactures knew that a single product defect can cause breakdown the producer’s creditability so they must have a defect-free process. Instead of a large lot production, manufactures decided they should produce more than just one good and have a diverse line of products. And finally, the way they were running things did not manage well for the fast delivery request, so there was a need to have a faster and reliable delivery system in order to handle customers’ needs.(1) With the use of the JIT system, these problems were solved and made things run a lot more smoothly with a lot less cost. To make the JIT system successful the cooperation between manufacture and its cha...
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.
RFID tags essentially provide a way for a third party, such as a government agency or corporations, to track an object over enormous distances in order to convey the location of, or information about that object. As a part of the new electronic product code (EPC), invented by the Auto I.D. Center at MIT, RFID tags were implemented to identify individual objects in a market setting, providing more efficient distribution and manufacturing logistics (Albright A8). Common applications of these tags...
I hit home the point with your staff the need to enter and track all merchandise items in the POS system. At the same time, your key staff members
Setup early warning system to inform customer about a potential stock out and supplier about a delayed order from CMO. This will help in reducing stock out situations.
It is suggested for any organization to review, reassess any existing supply chain management or any delivery techniques, before developing a new supply chain method so that any exposure to high risk of failure is reduced. Somerset as a company taken advantage of outsourcing and transferred it product manufacturing to China leveraging low cost labor and raw material. The labor cost and other cheap material reduce Somerset overhead cost, but there is always the risk of not delivering product on time due to the foreign country political climate, change in tax and tariff and local
According to Srinidhi and Tayi (2004), companies that are flexible enough and are able to change from a JIT system to a traditional inventory system will have a competitive advantage over other firms who do not switch. In such uncontrollable environments, the major benefit of JIT becomes a handicap with the increase in delivery times and the added data handling and coordination required in such times. This leads to a decrease in quick response time, which ultimately leads to increase in costs to the firm.
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
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
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;