Inventory Management Techniques For Competitive Supply Chain – A Case Study

Current purchasing and inventory management technique used by the company

Discuss about the Operation Management for Competitive Supply Chain.

It has been identified that among different significant aspects, inventory management is also one the important aspect of a successful business. Different techniques are involved to control and oversee the flow of inventory sections that an organization utilizes in the productions of the products to sale or distribution. As mentioned by Chung, Cárdenas-Barron and Ting, (2014), the inventories usually consist of the combination or mixture of products, raw materials as well as finished products. Therefore, effective and developed management technique is required to ensure the increasing stock levels. The enhanced management techniques are also required to increase the earning potential of the organization.

The appropriate implementation of the inventory management techniques contributes to the business in preventing or dealing with any damage or losses related to inventory (Song, Dong & Xu, 2014). Thus, it can be mentioned that effective inventory management is highly required as not only is inventory being the most valuable element to the organization; there is an effective relationship between the inventory levels and organizational profits. In order to understand the techniques involved in inventory management, the current report focuses on the current inventory management techniques used in Brisbane Outdoor, which has three different locations across Queensland City of Brisbane. The organization offers different mixed designed products that include different garden equipments. By analyzing the current inventory management techniques used by the company, the effectiveness and further improvement can be developed.

The case study indicates that Saxon usually follows and maintains Laissez-faire leadership style, which is also known as the delegative leadership style. While maintaining the operation at Mt Gravatt store, Donald is observed to be relaxed in the operation. On the contrary, Green would follow a tight operation at Strathpine. However, it is observed that in laissez-faire leadership style, the leaders hands.-off and permits the group members to make and implement management decisions. Likewise, at Mt Gravatt, Donald usually does not interfere in the operation of the branch being the CEO of the company. He would allow other persons or the production managers of the organization to investment decision to lead the business. As argued by Sadeghi, Sadeghi, and Niaki (2014), Laissez-faire leadership leads to the lowest productivity of the organization. As the leader of the organization shows poor interest in developing the operation of the organization, the other staff lacks motivation in the operation.

Comparative advantages and disadvantages of the used processes

This leadership style highly affects the inventory management practices of the Brisbane outdoor. The current techniques involved in inventory management of the company helps to learn that organization lacks a necessary large investment. The company did not implement any integrated approach. Brisbane Outdoor has three different similar stores but managers of three branches do their individual sourcing and purchasing of the inventory. Different approaches are followed in each of the stores, which mean no integrated approach has been applied. In the end, it could highly affect the organization as well as the company may suffer from the large sever financial crisis (Rushton, Croucher & Baker, 2014). In addition, the current inventory management system at Brisbane Outdoor provides an insight that lack stock investment may create a shortage in the inventory.

As the three branches of the organization run the operation of similar products, large investment should be made with integrated approach. Moreover, due to the laid-back attitude of the branch head, no modification of the approaches has been implemented. On the contrary, laissez-faire leadership followed by Saxon is not considered as the idea in situation where the members of the individuals lack the knowledge or the experience but they are required to accomplish the tasks as well as make the decisions. The current inventory management system of the company leads to unconnected purchasing and inventory management system. Due to the implementation of this approach, the organization is not able to make large investment decision, which is highly required for the organization. Additionally, it can also be mentioned that poor inventory management decisions could lead to further financial loss.

Advantages

The current inventory management approaches may provide certain advantages to the Brisbane Outdoor such as shortage goods can be transferred when the shortage of supply of the products occurred. As mentioned by Hill, Jones and Schilling (2014), Laissez-fair leadership may prove to be effective in the situation where the members of the group are highly skilled and capable on their own. Hence, the staff at the Mt Gravatt is highly skilled; thereby, Saxon would not interfere in the operation. In addition, these approaches indicate that the members at Mt. Gravatt have the knowledge and appropriate skills to work independently. However, as the firm does not have any integrated approach in managing the operation, each of the stores operated autonomously. As the managers at Brisbane Outdoor have the ability run the inventory system, they would do their own sourcing as well as purchasing of the inventory. Thus, the organization did not have to make investment in developing the techniques of inventory management. Hence, the company is free from the investment of providing training and development session. Therefore, a large amount of the money has been used in manufacturing of goods and services.

Supply-chain and inventory management concepts contributing to the company to maximize efficiency and minimize investment

Disadvantages

Although, the people at Brisbane Outdoor power centre are skilled enough to deal with the individual operation, there have been some cases where the group members are seen to be inefficient in making and implementing the large decision of the organization. In addition, three different styles of management have been followed in the operation; the firm lacks proper goals and objectives for the development of management. As the CEO of the company lacks interests and shows a laid-back attitude towards the enhancement of the management, the lower-levels staffs did not establish any schedule activities to accomplish the future goals. This could be worse if the completion in this particular industry increases. For example, if the new firms access to the market, Brisbane Outdoor may lag behind in performance since the company does not have any unanimous or integrated approach to control the operation.

Additionally, if the industry observes a rush in supply or demand of the products, the firm could suffer from the shortage of supply of the products despite the increasing demands (Farahani, Rezapour, Drezner & Fallah, 2014). Furthermore, as the managers of the organization do not interact with other managers of the branches, the current sales and profit margin of the company can be understood and developed properly by implementing advanced techniques. Lastly, it can be mentioned that, the firm needs to adopt changes in its inventory management systems to deal with future potential challenges.

Developed supply chain management

Integration of the logistic process with the suppliers: Irrespective of the size of the company, the most significant approach is to integrate the logistical approaches or the techniques with the firm. Whereas not entirely relied on the software system, particular applications of enterprise resource planning help the organization to enhance the communication in between the business as well as the suppliers (Mardani, Jusoh & Zavadskas, 2015). For example, if a supplier has the ability to acquire the rate based on which a business operates through its inventory, the business could easily meet any certain change in the demand by developing the operational efficiencies for both parties.

“Employ could-based system increasing cost savings as well as operational efficiencies”: The significant advantage associated with the cloud-based system is the increasing ability focusing on the domain experts discovered in the organization implementing these systems. As opined by Leiras et al., (2014), the small business generally does not have the proper budget for developing their Information Technology department. Therefore, by implementing the supply chain system in the cloud, the firm could take the advantages of the team that is relied on the software and networking. In addition, this technique reduces the efforts and time of the employees from running day-to-day operations. This could result in operational savings as well as the efficiencies.

“Advanced integrated inventory management system”

It has been observed that from an operational perspective, the preliminary goals of the organization are facilitate the approach of inventory management as inventory management system largely influences the operation (Esmaeilikia et al., 2014). Hence, the company could implement an integrated inventory management system, which could provide inventory visibility to the branch of supply chain partners. In addition, the company could state inventory in the financial reports quite appropriately. As mentioned by Martínez-Jurado and Moyano-Fuentes, (2014), by having a mixture and appropriate amount of the inventory on supply should be paramount to both customers as well as satisfaction of the investors. In addition to this, like every other organization, Brisbane Outdoor needs to utilize supply chain partners to deal with the levels of the inventory and the shipment of the customers. Thus, in order to implement this successfully, the inventory management system should be integrated with not only the back office system of the company but also with the suppliers and other logistic system of the company.

In order to successfully apply an advanced inventory management system, it is important for the organization to integrate the approach within the daily function conducted by the personnel of the organization. This approach provides a set of advantages such as when a user or the customer wants to order goods; the firms could go through the Inventory Management Systems screen to find out the Acquisition. Such type of process needs to be available for “Redeployment and Termination” of the assets (Laurent et al., 2014). When the use asks for a particular product of specific type of the goods, hence, the inventory systems go through whether the product is in the surplus or the product needs to be purchased under the existing volume.

“Integrated inventory management model”-

Figure 1: Integrated Inventory system model

(Source: Brandenburg, Govindan, Sarkis & Seuring, 2014)

The above-mentioned figure consisting of the entire structure of the inventory system model may look little complex; however, significantly all that are needed to execute an effective integrated inventory management is the proper understanding of the fundamental inventory management process. This model is mixed with effective as well a disciplined application of the practices or the approaches associated with the model (Martínez-Jurado & Moyano-Fuentes, 2014). The model indicates that the “blue-shaded” figure represent the stand-alone inventory management technique.

Aspects of the bill materials- This element helps to make the relationship of repairable ingredients, which is assembled as well as sub-assembled to make up the whole asset.

Usage of the data- The existing information relied on the materials issues that could reflect the deadline and values of the pound of all room parts of the store.

Inventory data- This element is considered as the fundamental part of the inventory control system.

Obsolete materials- This is considered as any material that could no longer be used due to redesign of the product, physical damage of the goods and deterioration and other reasons

Activities	Techniques of applying the model	Time
Reviewing the existing approaches of the inventory management system	Comparing the performance with the newly developed criteria	1st Month
Applying the new model of inventory management system	Matching the techniques of the model with the criteria mentioned in the beginning; this means the flaws in applying the technique and modify them accordingly	2nd month
Observing each of the elements associated with the model while implementing them replacing the existing system	Measuring the relevancy and efficiency of the model comparing with the existing system	3r week of the 2nd month
Observing the outcome of the model after the implementation	Measuring the outcome of the newly applied model	1st week of the 4th month
Evaluating the outcome	Identifying the flaws in the model	After 6 months of the implementation

Table 1: Action plan

(Source: Created by Myself)

Conclusion

On the completion of the report, it can be mentioned that though Brisbane has effectively earned the profits from three outlets of the organization. The leader of the organization maintains Laissez-faire approach to utilize the skills and knowledge of the personnel. However, it is necessary for the organization to implement an integrated inventory management system to control the operation of three stores with similar goals and objectives. This could help the organization to gain the projected benefits.

Reference list:

Brandenburg, M., Govindan, K., Sarkis, J., & Seuring, S. (2014). Quantitative models for sustainable supply chain management: Developments and directions. European Journal of Operational Research,233(2), 299-312.

Chung, K. J., Cárdenas-Barrón, L. E., & Ting, P. S. (2014). An inventory model with non-instantaneous receipt and exponentially deteriorating items for an integrated three layer supply chain system under two levels of trade credit. International Journal of Production Economics, 155, 310-317.

Esmaeilikia, M., Fahimnia, B., Sarkis, J., Govindan, K., Kumar, A., & Mo, J. (2014). Tactical supply chain planning models with inherent flexibility: definition and review. Annals of Operations Research, 1-21.

Farahani, R. Z., Rezapour, S., Drezner, T., & Fallah, S. (2014). Competitive supply chain network design: An overview of classifications, models, solution techniques and applications. Omega, 45, 92-118.

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Laurent, A., Bakas, I., Clavreul, J., Bernstad, A., Niero, M., Gentil, E., … & Christensen, T. H. (2014). Review of LCA studies of solid waste management systems–Part I: Lessons learned and perspectives. Waste management, 34(3), 573-588.

Leiras, A., de Brito Jr, I., Queiroz Peres, E., Rejane Bertazzo, T., & Tsugunobu Yoshida Yoshizaki, H. (2014). Literature review of humanitarian logistics research: trends and challenges. Journal of Humanitarian Logistics and Supply Chain Management, 4(1), 95-130.

Mardani, A., Jusoh, A., & Zavadskas, E. K. (2015). Fuzzy multiple criteria decision-making techniques and applications–Two decades review from 1994 to 2014. Expert Systems with Applications, 42(8), 4126-4148.

Martínez-Jurado, P. J., & Moyano-Fuentes, J. (2014). Lean management, supply chain management and sustainability: a literature review. Journal of Cleaner Production, 85, 134-150.

Rushton, A., Croucher, P., & Baker, P. (2014). The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.

Sadeghi, J., Sadeghi, S., & Niaki, S. T. A. (2014). A hybrid vendor managed inventory and redundancy allocation optimization problem in supply chain management: An NSGA-II with tuned parameters. Computers & Operations Research, 41, 53-64.

Song, D. P., Dong, J. X., & Xu, J. (2014). Integrated inventory management and supplier base reduction in a supply chain with multiple uncertainties.European Journal of Operational Research, 232(3), 522-536.