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Theory of Inventory Management
Case study, inventory control
Project work report on inventory management
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Tutor-Marked Assignment (TMA) is requirement as part for the Master of Business Administration (MBA) Degree program at The Arab Open University(Oman Branch).
This report presents Discuss and analyzes the case study (“Creating agile supply chains in the fashion industry”) using the course materials related to the process view of business operations (block 2 chapter 3). Also by Using the relevant course concepts discussed under “Planning and control” in block 2 chapter 6 (capacity and inventory planning, supply chain planning and control, and ERP systems), analyze the supply chain agility in fashion industry described in the case study provided.
This report is. organized into the following sections: Introduction, Body, Conclusion and References...
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Matching supply and demand is achieved at 3 levels. First, operations strategy is concerned with defining demand in terms of broad operations performance objectives related to aspects of stakeholder value, and with deciding on the general ways in which the operation will satisfy those demands (i.e. customization…). Second, operations design is concerned with a detailed specification of the products, processes, and staff needed to fulfil the strategy. Third, operations planning and control is concerned with the day-to-day operation of the process, adjusting to daily or weekly fluctuations in demand, or difficulties with supply. There should be a match between supply and demand in the following 3 areas: volume – the amount of the product that needs to be delivered. timing – when this product is available. quality – the specification and performance of the product in relation to customer expectations" (Bettley & Tantoush, 2007, pp.135-136). The Supply Chain Planning and Control business area enables you to manage your supply and demand planning, and control the material flow. Supply chain management is the main control and planned for all the products required of the market because they are in direct contact with customers, so the success of the companies and maintain customer satisfaction relied upon heavily. "The fundamental problem that faces many companies (not just those in fashion industries) is that the time it takes to source materials, convert them into products and move them into the market place is invariably longer than the time the customer is prepared to wait. This difference between what might be called the "logistics pipeline" and the customers' order cycle time is termed the "lead-time-gap". Conventionally, this gap was filled with a forecast-based inventory-there was no other way of attempting to ensure that there would be product available as and when customers
Accommodating customer requirements in most supply chain arrangement requires a forecast to drive the process. (book page 133) When looking into the definition of forecasting which is projecting what is going to be sold (units, seats, rooms etc) it is also important to take into consideration where and when in order to reach the future goals. (book page 133) Since it is argued that effective supply chain and logistical capacity is an important competitive advantage. (Christopher 2005) Where maximizing the revenue is the key element in hospitality sector and for hotel industry there is an increased attention on effective demand management and forecasting for reservation systems. (http://www.sciencedirect.com/science/article/pii/S0169207002000110)
A supply chain is a system through which organizations deliver their products and services to their customers. The network begins with the basic ingredients to start the chain of supply, which are the suppliers that supply raw materials, ingredients, and so on. From there, it will transfer the supplies to the manufacturer who builds, assembles, converts, or furnishes a product. The chain now needs to get the product to the consumer by transporting the finished product from the manufacturer through a warehouse or distribution center. An example is that Wal-Mart has a nearby distribution center where products are delivered there and then split up to be delivered to a retail Wal-Mart. “Wal-Mart will take responsibility for breaking down larger loads and delivering the product to other Wal-Mart stores” (Ehring 1).
However, instead of the lean approaches mainly making forecasts according to the EPOS data, the agile approach need to do more work. First of all, demand recording and forecasting. For instance the retailers should make records of the everyday demand and make forecasts of the future demand trend with the help of current demand data. By doing this, Promotions can be forehead noticed and the reaction speed can be improved. Secondly, the information system. The information system is the bridge between different upstream and downstream partners. Thus it is very important for the agility partners improve their information system to smooth the information transfer. For instance, electronic data interchange (EDI), radio frequency identification (RFID), and Distribution Requirements Planning (DRP) system are all good information systems for transferring the EPOS
So that our decisions would lead to a better performance on the inventory levels which means a more stable inventory according our policies but our order policy based on the expected demand would not be changed while the impact of our policy on the inventory is better because our orders are met with a better
Reflected from the lately research and news, in order to gain back market share and further improvement, M&S faces multiple supply chain and logistics problems. Among them, the main three are: 1. Poor performance of agility in M&S’s supply chain. 2. Ethical issues. 3. Poor performance of M&S e-commerce and home delivery. This report will focus on illustrate and approve significance of these three main supply chain and logistics related issues, and carry out practicable solutions to these challenges.
the inherent supply chain in this industry, which is done through encouraging the collaboration of all these elements in a given project. Some of the unique barriers in the process have been discussed below-
Sunil Chopra and Peter Mendl argue that inventory is one of the drivers of the supply chain performance and that it has a great impact as the other drivers, such as facilities and transportation which are the same as inventory being ‘Logistical Drivers’. Analyzing the position of inventory in the supply chain, certain factors of the inventory will be taken into account such as the responsiveness, economies of scale, the different variations of inventory, how other factors will affect the inventory, and transportation, which as stated before it is one of the drivers in the supply chain, Vs. inventory. All these concepts of inventory will be analyzed in the supermarkets domain and how crucial is inventory for the supply chain performance.
The allocation, in regards to manufacturing production, is a particular based on the forecasts we make based on the past trends. Referring back to the discussion of long lead times, it was clear with shorter lead times, we as a supply chain team, can meet the demands just as expected. We would need to ensure that we don’t over produce nor under produce, however, it took a while for us to grasp this concept.
It is a well-known fact that Zara employs a team of over two hundred designers to implement the company’s “fast fashion” design principles. Without an efficient, well-planned, and organized supply chain to manufacture and distribute their clothes Zara could employ two thousand designers and it would not matter. Zara’s supply chain is what allows them to pull their clothes to retail stores and ultimately to the customer. Zara’s manufacturing process is similar to the just-in-time processes Toyota implements in car manufacturing. In fact in the early 1990s Zara collaborated with Toyota’s operations consulting firm to help install a just-in-time system in Zara’s manufacturing factories.
The efficient supply chains are unable to respond to the unexpected change in the demand or supply. For example, when companies have a centralized manufacturing and distribution, they are tuned to minimize transportation costs and freight costs. Now, when there is a sudden demand for a particular brand/SKU, they are unable to react quickly even if they have the items in stock. Companies’ obsession with speed and
The furniture company Somerset needs to retain its customer service record and remedy any of its global supply chain issues before it has an adverse effect on the brand and start losing customers. With a frequent change in the product catalog, keeping an excessive inventory will cut its profit and some of the product may become obsolete even before the furniture hits the retail outlet stores. In order to achieve profit and success, business employee many strategies and the supply chain strategy are one of the operational management techniques that use analytical decision making process to achieve the company goals and provide tools to effectively compete in the market (Taylor and Russell, 2014).
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.
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 of 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 seen 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; effective and efficient inventory management is of critical importance.
This is the activity carried out by organizations that own production sites, and their performance has a major impact on product cost, quality, speed of delivery and delivery reliability, and flexibility [8]. As it is quite an important part of the supply chain, production needs to be measured and continuously improved. Suitable metrics for the production level are as follows. Order lead-time, the total order cycle time, called order to delivery cycle time, refers to the time elapsed in between the receipt of customer order until the delivery of finished goods to the customer. The reduction in order cycle time leads to reduction in supply chain response time, and as such is an important performance measure and source of competitive advantage [9]. It directly interacts with customer service in determining competitiveness. Range of product and services: According to [8] a plant that manufactures a broad product range is likely to introduce new products more slowly than plants with a narrow product range. Plants that can manufacture a wide range of products are likely to perform less well in the areas of value added per employee, speed and delivery reliability. This clearly suggests that product range affects supply chain performance. Effectiveness of scheduling techniques is another important measure of supply chain effectiveness. Scheduling refers to the time or date on or by which
Inventory management is defined because a science mostly established art of guaranteeing that just enough inventory share is command with a company to fulfill demand (Coleman, 2000; Jay & Barry, 2006). it's mostly regarding specifying the size and keeping of stacked product. Inventory management is usually needed at completely distinct spots within a service or within multiple spots of a supply network to guard the standard and planned course of production up against the random disruption of running low upon materials or product. The scope of inventory administration also concerns the good lines between replenishment period interval, carrying costs of inventory, asset management, investment forecasting, inventory valuation, selection visibility,