One of the most important aspects to consider when comparing the current purchasing strategy with the proposed one is the impact of direct deliveries from external suppliers to the central warehouse on the lead times of spare parts which are ordered by the warehouse planners. Lead times have a big influence on inventory planning and replenishment policies and lead time savings can be very beneficial for the business of a warehouse and the performance of a SPSC (de Treville et al. 2004). Hiller and Liebermann (2001) regard unnecessarily long lead times as a form of waste and minimizing or avoiding waste as a key component of superior inventory management. In the current setting, three stages of the SPSC are involved in the purchasing …show more content…
when the supplier is located closer to the warehouse than to the respective factory.
The lead time reductions which could be realized with a change from the current to the proposed purchasing strategy would lead to several improvements for the warehouse planning which are presented in the following. Shorter lead times would facilitate a more flexible and customer oriented planning and would lead to a reduction of uncertainty. According to the BAAS planners, this uncertainty could be reduced especially in the context of forecasting the demand during the lead time. Obviously, the lead time demand forecasts would be more accurate when the lead times could be reduced because the shorter the demand period which has to be forecasted is, the more precise will be the forecast.30 In addition, shorter lead times would consequently lead to lower demands during the lead time and would result in less variability. Lower lead time demands, less variability and a reduction of uncertainty would automatically reduce the necessary safety stocks at the warehouse. Hence, shorter lead times would also result in a reduction of average inventories, reorder levels and order up-to levels. Decreasing average inventories imply less capital tied up in inventory and higher stockturns. Moreover, less average inventories mean less inventory holding costs. The head of the BAAS planning department mentioned two additional positive aspects of shorter lead times. Firstly, large and
During the game, I realized that wide gaps in orders of every role in the supply chain such as factory, distributor and retailer create inventory management challenges. For example, distributor records 0units between week1-week 4 compared to retailer within the same period. The retailer records 3units, 5units, 2units and 2units between weeks 1- week 4. The same applies to factory with 0units from weeks 2-4. Addressing inventory management problems requires developing an average unit level to avoid disappointing customers when demand
The average lead time of a corporation is 15 weeks from production to consumption. Benchmark firms have a lead time of 8 weeks which is the goal for the supply chain (Heizer & Render 2010). The 8 week number will be achieved by analyzing opportunities to streamline the process thereby creating efficiencies and driving down the amount of time it takes to produce and ship products. Setting a goal for an 8 week lead time will give the firm an opportunity to assess their forecasting and production capabilities presenting a way to identify and address inefficiencies.
Office Depot uses multiple inventory strategies to order products. 90% to 95% of goods are ordered through automatic replenishment, manual replenishment, pull replenishment, and global sourcing are also used depending on channel, volume, velocity and cost. (Office Depot, 2015). The accuracy of the inventory from both a DC and store perspective is critical to the organizations success. Heizer and Render (2014) state that record accuracy is a prerequisite to inventory management, production scheduling, and sales. Accuracy is maintained by either periodic or perpetual systems (p.479). In Office Depot, the stores are required to cycle-count technology items such as laptops, desktops computers, and tablets five days a week. Discrepancies are entered in the system and bounced off the local DC’s on-hand inventory discrepancies. Office Depot is a “blind receive” organization meaning the stores receive pallets of products and simply unwrap and put them away. The only way a store knows if a product is missing is through the cycle-count program. This system was put into place to speed up the receiving process and eliminate unnecessary steps once the product was received at the store level. Office Depot conducts a full physical inventory once a year through a third party and trues up the inventory shrink at this time.
1. Understand and identify supply chain issues and constraints faced by aircraft parts manufacturers like HAL and contrast it from supply chains of other industries 2. Apply basic economic order quantity model to make inventory decisions 3. To analyze supply chain system with serial manufacturing fraught with uncertainties and variations in processing times 4. Use probability models to estimate the probability of on-time delivery under different scenarios 5. Estimate the penalty cost for not meeting the delivery guarantees 6. Demonstrate the use of advanced stochastic models to optimize the use of shelf life parts in the supply chain 7. Summarize mathematical complexity associated with the problem and provid
In the calculation of average inventory levels, a desired service level of 99% and a review period of 14 days with a lead time of 5 days were used to calculate the safety stocks and order-up-to-levels for each product under each circumstance. Then the amounts of overstock units were obtained by calculating the differences between OULs and average demands, and the overstock inventories were the overstock units multiplied by the unit cost. The annual average inventory levels were calculated to be $31,560.75 for the eight warehouses option, $14,120.28 for the two warehouses option and $9,403.24 for the one centralized warehouse option. As for the outsourcing option, the responsibility of inventory management would fall upon GL, so that there would be no inventories for SG.
The timing of capacity changes also needs to be taken into consideration to achieve maximum efficenty given that demands of their products varies with seasonal changes. The ability to react to market demand changes quickly will determine manufacturers flexibility in keeping up with these demands. Manufacturers needs facilities to produce, whether warehouses to store its raw materials or finished goods, or manufacturing plants to produce their products. Services facilities are needed by certain manufacturing industries such as consumer electronics to cater for returns. Distribution centres also determine the efficenty of production distribution and un-nesessary inventory holding will result in higher holding cost. Such facilities require large investments and are integral of the manufacturer’s supply chain strategy and thus proper planning is needed when making these decisions regardong the size, location which affect the overall operations. How manufacturers run their productions also determine how successful will they be in terms of productivity and quality levels. Different types of equipment and processes also affect the cost and output of the manufacturing plant. Information systems that flow both upstream and downstream affects the forecasting, planning, inventory and production levels, they must be robust to ensure the manufacturing firm is able to react accordingly to changing demands and variations. In addition to their internal environment,
Following considerable investment in new warehouse and carrier management systems the number and quality of delivery options had increased. Now delivery options include: same day, next day or standard delivery options that normally takes around 2-3 days. Also customers can set delivery date by themselves and if wanted can be notified via email or text alerts of delivery status. In addition 85% if orders are tractable
Using Supply-Chain Management to reduce space and investment requirements while maintaining adequate service levels is that when an effective supply-chain management, Wolf Motors can streamline the acquisition processes and maintain efficient inventory control while reducing unnecessary inventory warehousing. Wolf Motors could analyze the historical inventory turnover rates to diagnose the appropriate range of supplies that should be on hand in each and every category. Wolf
When offers of reduced pricing are accepted for equipment, meeting delivery expectations becomes an important part of enhancing the customer experience to maintain satisfied loyal customers. An inventory specialist in the current distribution center would be given the additional task of segregating and maintaining inventory levels to meet the needs of the customer loyalty department.
* Since no inventory is maintained at near-by locations, the goods will have to be fetched from central warehouse thereby increasing lead time.
While the purchasing department is busy working on the inventory other departments are using the sales projections to work on their staffing needs. They have done time studies to determine how many “pickers, and packers” are needed for their peak season. Their customer service department is also using these same sales projections to determine how many phone calls they will receive along with how many representatives they need. They are also meeting with shipping companies to negotiate cost and packing volumes. The shipments begin coming in June, and brought to their receiving area. Once everything is checked and made sure they have received what they should have received it in put into their warehouse. The warehouse is set up from slower movers to faster movers. The faster movers are set up closer to the conveyer lines to minimize the travel time for the pickers. In August they start staffing of the warehouse. While all departments are filling their staffing needs and beginning their training, the purchasing department is watching what costumes are selling early to see if there is
Apple Inc. is a manufacturing company that produces and markets mobile and media devices, personal computers, and portable digital music players. In addition to these devices, they also sell a variety of software, services, peripherals, networking solutions, and third-party digital content and applications that can be accessed through the devices. Some of these popular devices that are manufactured and sold by the company include Macintosh computers, iPhones, iPods, and iPads. The Macintosh computer may be the most popular device that has been created by Apple. When it was released in 1984, it became the first computer to successfully use a Graphical User Interface. This allowed users to navigate the device by selecting pictures on the screen by using the click of a mouse. The success of this creation inspired the development of modern computers. It helped to launch the use of the Graphical User Interface that most modern-day computers use today.
Joe Williams is the president of Nichols Company (NCO), which manufactures three primary products and has over 355 employees. In addition, NCO has been having some issues with their supply chain in the past few months and it has affected their customer service. This paper will summarize the case study, determine NCO 's appropriate forecasting technique, discuss the impact of aggregate planning, weigh NCO 's various cost factors associated with carrying inventory, and make recommendations for improvement.
Inventory itself is a list of products that a company has available for sale to customers. So what is Inventory Management? By definition according to BusinessDictionary.com, “Inventory Management is policies, procedures, and techniques employed in maintaining the optimum number or amount of each inventory item”.
The data can easily loss because they only use a logbook to record their inventory data. With the system, it will help more on the security of the data. Inventory loss hard to detect because admin need to review one by one page in the logbook, but with the system developed, it may help the admin to detect the inventory in and out from the