Implementation Of Inventory Management System: Analysis And Recommendation

Current Purchasing and inventory management process

Discuss about the Implementation of Inventory Management System.

In the reported study paper, an analysis of current purchasing and inventory management system of Brisbane Outdoor Power Centre has been discussed identifying the leadership strategies of the current CEO, Ms Belinda Green. On the basis of the case study of the organisation, the competitive advantages and disadvantages of the existing inventory and procure system have been highlighted to show the role of the managers in working in the three outlets of the firm (Hasan, sarode and Wasu, 2016). Meanwhile, applying the effective supply chain management theory, procurement theory, inventory theory and demand theory, the structure of a significant supply chain and inventory management system have been delivered in this paper. In the end, a list of effective recommendations has been given to draw a significant conclusion on the topic (Tan, Li and Chai, 2013).

Considering the case study, it can be seen that the store operated by Belinda Green has followed an authoritarian purchasing and supply chain management system. On the other hand, the procurement and inventory management system practised by other two stores have been found to be traditional by Belinda that are unorganised and used a haphazard process of procurement (Magee, Copacino and Rosenfield, 2015). The case study on Brisbane Outdoor Power Centre shows that the current purchasing and inventory management system is based on Saxon’s Laissez-faire approach. Accordingly, the existing process is based on traditional inventory management model in which every store maintains a separate inventory and orders their raw materials as per the requirement of the customers (Heizer and Render, 2011). There is no systematic process used in the stores to order products earlier that will have a demand in the future. On the other hand, the existing process differs from that of the modern supply chain model in which a common inventory and procurement system is used to maintain a balance in sales and inventory (Hasan, sarode and Wasu, 2016). Hence, it can be seen that each store operates autonomously and the inventories are purchased using substantial orders. Stocks are transferred between each store in the case of shortage of products that creates a haphazard situation and leads to delay in shipments (Postl, 2012). On the other hand, the traditional process makes the customers wait to get confirmation of their orders and receive the final deliveries. Hence, the traditional process of procurement and inventory management is not competitive in nature and may lead to different negative impacts on the reputation of Brisbane Outdoor Power Centre.

Competitive advantages and disadvantages of the presently used process

In the existing business model of Brisbane Outdoor Power Centre, the current purchasing and inventory model of the group has significant advantages and disadvantages in order to maintain the three stores located in Mt Gravatt, Strathpine and Ipswich. Identically, the current purchasing and stocking system of the firm has lacked investment and modern concepts, to say the least. Herein, the pros and cons of the existing system have been analysed as follows:

• Individual Store Operations: The current procurement and inventory model of Brisbane Outdoor Power Centre, each of the stores of the firm can organise the stocks of products as per the requirement. As a result of the scenario, the store manager can provide a better management as the inventory maintenance will be easier.
• Low Maintenance cost: The existing inventory model of the three stores of the firm has required very minimum funds as the stores do not maintain large stocks. According to demand of the purchasers, the stores manage their inventory system reducing the maintenance cost (Greasley, 2008).
• Minimum Space Requirement in inventory management: The existing purchasing and inventory management model of the stores are relatively old-fashioned. Therefore, the warehouse of the stores has minimum space so that the retail outlet can be bigger than normal. Also, small inventories do not need many employees to control the system.

• Delay in consignment: As the stores of Brisbane Outdoor Power Centre has managed low inventory as per the demand, the large shipments have to be delayed to unavailability of stocks. As a result of the scenario, customers ordered large consignments have to wait a bit more for their purchase.
• Shortage of Stocks: Due to the shortage of investment, the stores of the firm have limited stocks of products. Now, if the demand for an individual product is increased, the stores cannot provide adequate stocks to the customers. The current purchasing and inventory system has disallowed the facility to hold large stocks of brand products.
• Deduction of reputation: Lack of technological efficiency and stocks have destroyed the fame of the stores to some extent. Understandably, the current procurement and inventory management do not meet the satisfaction level of the customers leading to failure of customer retention.

An appropriate supply-chain and inventory management system must include four theories to be compiled such as Supply Chain Management theory, Inventory theory, Procurement theory and demand theory, to say the least (Carzo, 2008). In the underlying section, applying the identified theoretical concepts, an appropriate procurement model and inventory system has been produced as follows:

• Create Common Inventory: By utilising the inventory theory, the organisational manager can minimise the cost of inventory and maintenance. Thus, a common inventory will be the best identified solution according to the inventory theory (Emmett, 2015). Decisively, a common warehouse can eliminate problems of stocking of brand products that are profitable for all the stores. In this based on inventory theory, suitable common inventory can be significant to determine an effective procurement management system (Lampkin, 2007).
• Enforcing Just-In-Time Model: In operations management of the enterprise, supply chain management theory must be improvised to put Just-In-Time model in the inventory management. By applying the model in the supply chain of the stores, the inventory cost and excessive space of inventory can be reduced (Gou, Shen and Chai, 2013). Thus, the supply chain theory can contribute to procurement system and inventory management.
• Significant handling of latest Procurement Strategy: The modern business firms can apply demand theory in order to change their procurement system on a regular basis (Lancaster, 2007). As the demand of products is based on the fundamental of economics, the current procurement system must be updated on a regular time according to the shift in demand. Hence, demand theory has been evident to reduce the inventory costs maintaining sufficient stocks (Gibson and Butler, 2013).
• Build an Online Inventory Channel: By using the modern procurement theory, significant online inventory channel can be formed so that the monitoring of the system will become a lot easier than normal. Meanwhile, the procurement theory helps to create an inventory channels according to the relation between buyers and suppliers situated within the same supply management chain (Fernandez and Kekale, 2007). Thus, the online inventory model can increase the productivity of the overall supply chain.

The following recommendations are suggested for the Brisbane Outdoor Power Centre to restructure its current purchasing and inventory functions:

• Implement multi-period and just in time inventory models: Brisbane Outdoor Power Centre needs to replace the current business operations using the multi-period and just in time inventory models that will increase the efficiency of the inventory systems and increase the reputation of the company (Theil, 2010).
• Modern supply chain system: A modern supply chain system can be implemented to keep a regular watch on the procurement processes using newly trained experts (Theil, 2010). It will reduce the loop holes of the current inventory management system and increase the efficiency of the stores.
• Centralised warehouse: A centralised warehouse can be used for all three stores to increase the stock and provide a larger variety of products (Slack, Chambers and Johnston, 2010). It will increase the reputation of the company and reduce the chances of delay in shipments.
• Identify cost-effective suppliers: Finally, Brisbane Outdoor Power Centre needs to identify cost-effective suppliers by conducting a regular market research and maintain good relationship with large number of suppliers (Rader and Katzner, 2012).

In the case of acceptance of the above suggested strategies, the following action plan can be used by Brisbane Outdoor Power Centre to improve its supply chain model.

Action Plan
Monitoring activities	Problem(s) that this activity addresses	Recommendation
Current Business Operations	Delays in procurement and inadequate inventory	There is a need to train current employees, use digital inventory system and implement modern supply chain model.
Supply Chain System	Inadequate stock of materials, availability of all brands and large range of products. (Vil’chevskii, 2009)	Proper monitoring of new inventory and procurement system by hiring new experts (Vil’chevskii, 2009).
Centralised Warehouse	Problems related to autonomous warehouses	Invest on hiring a common warehouse and develop online inventory management system (Vil’chevskii, 2009).
Identification of Suppliers	Delays in shipment and changes in price.	Maintain proper relationship with large range of suppliers.

Conclusion

Considering the above analysis, it can be seen that Brisbane Outdoor Power Centre faces different negative impacts due to the current inventory management system. Hence, there is a need of making necessary changes in procurement and inventory management system by implementing theoretical models of modern supply chain management. A proper change in the purchasing and inventory management system can be helpful for the company to seek better reputation and win the battle of competition in the current market scenario.

References

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Emmett, S. (2015). Excellence in warehouse management. Chichester, West Sussex, England: Wiley.

Fernandez, I. and Kekale, T. (2007). Strategic procurement outsourcing: a paradox in current theory.International Journal of Procurement Management, 1(1/2), p.166.

Gibson, D. and Butler, J. (2013). Evaluation of inventory management. Business Horizons, 16(3), pp.51-60.

Gou, J., Shen, G. and Chai, R. (2013). Model of service-oriented catering supply chain performance evaluation. Journal of Industrial Engineering and Management, 6(1).

Greasley, A. (2008). Operations management. Los Angeles: SAGE Publications.

Hasan, R., sarode, D. and Wasu, R. (2016). Implementation of Inventory Management System in a Small Business Unit as a Part of SCM. IJETT, 32(1), pp.45-49.

Heizer, J. and Render, B. (2011). Operations management. Upper Saddle River, N.J.: Prentice Hall.

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Lancaster, K. (2007). Revising Demand Theory. Economica, 24(96), p.354.

Magee, J., Copacino, W. and Rosenfield, D. (2015). Modern logistics management. New York: Wiley.

Postl, P. (2012). Efficiency versus optimality in procurement. Econ Theory, 53(2), pp.425-472.

Rader, T. and Katzner, D. (2012). Static Demand Theory. Econometrica, 40(4), p.787.

Slack, N., Chambers, S. and Johnston, R. (2010). Operations management. Harlow, England: Financial Times Prentice Hall.

Tan, W., Li, X. and Chai, Y. (2013). Policy-Combination Oriented Optimization for Supply Chain Simulation. AMM, 302, pp.646-651.

Theil, H. (2010). Value Share Transitions in Consumer Demand Theory. Econometrica, 38(1), p.118.

Vil’chevskii, N. (2009). On a Process of Inventory Theory. Theory of Probability & Its Applications, 33(3), pp.582-585.