Discuss about the research article based paper is to compare and analyse the three-research articles and selecting three cases that are related on three small enterprises.
Due to the advancement of the technology and the globalisation, the issues of the procurement and inventory management are hotly debated topic among scholars. Fault estimation can cause losses to the firm with an overstock that result to waste or which can results to the loss of the sales. The authors recognises the cause of the challenges is the quantity of each order and the reorder period not set. Similarly, author recognise match between the projection made by the senior management and the actual sales which cost the business. The author recommends that keeping the figures of sales can makes the inventory storage for the firm to be smaller and can reduce stock out of situation and increase the return on investments. Inventory positioning is useful tool which can used to accomplish the demands, position the merchandise and targets the users in the market. When the company keeps the level of excess inventories high, it can leads to the unstable liquidity. Incorrect planning of items of the order can result to out of stock or overstock situations which can have large impact on the food industry. It is worth noting that optimum inventory should be kept on hand is the quantity to satisfy the user demand each successive reorder time. For the inventory department, two aspects are important to consider prior to the reordering of the items. Whether a demand is fixed or variable is of essence. Additionally, if the reorder lead time is variable or fixed. By having fixed time and demand, the company cannot face any stock out condition. On the other hand, having variable order lead time and demand, the company ought to keep specific amount of the safety stock just in case of the down fall. The following paper critically analyses and evaluate various case studies and investigates the different aspect of the procurement and inventory management.
Article 1: Determining Inventory Management Policy for Perishable Materials in Roemah Keboen Restaurant (Ramadhan & Simatupang, 2012)
The author has addressed an issue on inventory management of wasted materials due to the short shelf life of material. Error estimation would cause losses to the company with an overstock that results in wastage or out-of-stock which may results in lost of sales. The study was conducted on a restaurant, Roemah Keboen where the author has identify the problems, analysed it and provided a recommendation. The procurement process of the restaurant started with the executive chef who plan the quantity of order. The data was collected from the kitchen division where the daily quantity used was identified and the executive chef would make his predictions on the next order. The root cause of problem is that the quantity of each order and the reorder time was not set. There may be a mismatch between the prediction made by executive chef and the actual sales which may cost a lost to the restaurant. The author has recommended to keep a statistical sales for example like using RFID so that it can make the inventory storage for restaurant to be smaller and decrease stock out situations and increase more profits and also have better decision on the considering the best reorder point.
Article 2: An Empirical Analysis of Inventory Positioning for Pertinent Operations (Chalotra, 2014)
The article demonstrates an empirical analysis of inventory positioning for pertinent operations and its proper management and control. The study was conducted on 152 wholesalers where the primary data was collected. Inventory positioning was a tool used in meeting demands, targeting customers and positioning products in the market. By keeping high level of excess inventories may lead to unstable liquidity and companies may have issues converting the inventories into revenue. The author has taken other costs into account; Holding cost, setup cost, ordering cost and shortage cost.
Article 3: A Measured Approach To Food-Inventory Management (Farsad & LeBruto, 1993)
The article illustrates the best reorder point where one provides safety stock yet doesn’t overfill the freezer. The authors pointed out the most common issues that bother a food-service company are generally related to inaccurate forecast of quantities of order and when to order which results in overstock or out-of-stock situations. The optimum inventory that should be kept on hand is the amount to fulfill customer demand between each reorder period. There are two main components to consider before reordering. The demand, whether it is fixed or variable; the reorder lead time whether is it fixed or variable. By having a fixed demand and delivery fixed time, the restaurant will not face any stock out situation while having a variable demand and order lead time, the restaurant should keep a certain amount of safety stock just in case.
The research methodology used in Article 1 includes problem identification, literature review, research method, data collection, data processing and analysis, and recommendation. The problems identification is based on the existing information (secondary data) provided by the restaurant. Theoretical foundations were used to analyze the data, evaluate the problem, and give the solutions and recommendations to the company to solve its problems.
In Article 2, the author has performed the descriptive method to identify the current issues or problems through data collection that helps to give clearer picture of the issue. Descriptive method relies on the observation as the means of collecting data instead of the artifacts or examining records. It is used to predict what may happens under the same circumstances.
In Article 3, the author has proposed RFID system to help identify the solutions. It is a fixed technological process.
Although the three cases have similar methods but their applying situations are different. Case study (1) stands unique among the other cases. In the case study (1), it is reflecting the EDI system and supplier management’s positive influence which is the first methods to reproduce the absent implications. And also in this case, we have also learnt the downsized of the UPS which were shown out to be supported inefficiently the processes during the peak seasons while the sales are affected by the bullwhip effects. The selection of suppliers and resources were limited and regarding the concern and capabilities of suppliers whether they can complete their customers’ order or not. Unlike the case study (1), case study (2) and (3) focus on the usage of the EDI and show a process whether it can be created into all in one by relationship management.
Case study (2) discusses about the integrating of how health care environment’s lean production systems deliver chaos procedures to supply rooms. In the medical center of Chicago, developing and executing a process which incoming orders can be done by less human error was the Professor Jon Stegner’s goal. His goal included standardizing layout in order to make it easier for staff to enter the every supply rooms in any level and department and find the goods right away. And also, he used RFID to update frequently the inventory storage and for the stock replenish despite of needing the actual supplies and inputs.
Case study (3) is similar to case study (2). It is emphasis on improving relationship between suppliers using lean production. Manager John Deere wanted to improve carefully and select the lean suppliers’ dynamic group critically and then keep them through open communication using ERP system.
Overall of the cases are that, companies and businesses can improve and growth the responsibilities due to arising of the issues for example as shown in case study (1) working in peak seasons and busy time. In the case studies (2) and (3), it suggested that providing open communication and exchanging the data between the firms can lead to have precise supplies and have better control in managing the supply chains. Among these three case studies, the evident is that while selecting the right suppliers, it is important to have mutual trust and their willingness to devote the process to make sure their goals are also going in the same direction with objectives and goal of the respective companies.
Forecasting on the historical data analysis
For the case study, the best ways to forecast the demanded stocks for particular time is using the historical data because the company can look up to historical data and manage their inventory to match the supplies and demand. Although using the historical data can be lack in completeness but it is still the better method to reduce the risks of having over stocks and stock out situations and can predicts the incoming future demanded stock. For example, they can show the data which are recorded so that it can exemplify how much demanded stocks are needed for the peak seasons and events like Valentines’ days and Halloween seasons and also Christmas seasons like explained above in case study (1) before. So that, they can determine how much quantities are needed to purchase and store the stock in advance and manage the inventories for the peak seasons and also historical data can parallel the company’s delivery system of how they used and arranged shipping external infrastructure to ship on time and advance before the peak seasons like Christmas is coming.
Improving the selection of suppliers criteria and their capabilities
Every company should focus and analyze carefully on their current suppliers’ existing and improving capabilities, how well they can use technology and how much capacity needed. Reliabilities of suppliers, timely delivery, technology knowledge and managing how much capacity needed are the key points in selecting the right suppliers for each companies. As mentioned in case study(1), because of the inadequate equipment and supplies from the supplier, there had been delayed in delivering the ordered goods to customers and the ordered were not sent to them on time for the Christmas seasons. Because of these issues and problems, the company should reconsider the suppliers’ capability and check the resources whether they can provide or not to fulfill the customer orders. And also, the other things that company can do to avoid these kinds of situations is having and finding the alternatives suppliers who have the same quality that the company wanted regardless of the variation in prices and can deliver on time during busy seasons.
Target the right product and forecast efficiently
Most of the companies have their product review and frequently used items from their customer usage and they determine which products are demanded and are not demanded and focus more on the demanded products. For example, in restaurants, the frequently used common items are take away containers and kitchen wares and in office, the frequently used items are paper, pens and computer etc. So that the particular business can analyze these and forecast the demand and used the method which can help to minimize the risk situations such as facing the stock out situations and having over stock situations and manage the expired stocks and inventory in the supply chain.
Case Studies
Case 1- Article 2
The issues of the case (1) is that the company and retailers could not delivery on time to the customers from their respective warehouses because of the UPS did not have inadequate physical requirement and also the resources from the suppliers were not prepared in advanced. And also related to article 2, positioning the inventory needed to be managed carefully because it can balance how much goods are consumed and how operations can manage to reproduce the demanded good and reduce unnecessary costly process and improve saving while managing the operations.
Case 2-Article 1
The case (2) discussed how inaccurate record of the inventory can measure the performance of the inventory management. And also in article 3, inaccurate storage can show how the restaurant make profits and losses in managing the supply. Various problems can cause the inventory inaccurate in the restaurants such as staff place misplaced the product and also lack of checking transaction errors in busy time. So, it is important for all businesses to reflect the technical inventory records and actual inventory records. And also, it should emphasis on the common restaurant products to prevent the stock out situations due to transactional errors. Article (3) discussed about the usage of the RFID because it can prevent the inventory inaccuracy and reduce the risks and increase the profits.
Micro Enterprise – Restaurant
According to the research articles, inventory management is extremely important to plan on the replenishment. Experiences situations such as overstocking or stock out may results in losses of the company. In Article 1, it is mentioned that the shelf life of ingredient is an important component to take note of as well. The expired ingredients must be dispose off thus resulting in high level of wastage and incur other costs such as holding cost and ordering cost which is mentioned in Article 2. Article 3 has stated the importance of knowing the demand of customers and reorder lead time. If the demand is fixed with fixed reorder lead time, it is very easily to forecast the quantity of order and set a reorder point. With a variable demand with variable reorder lead time, there are others aspects to be taken into considerations. The core problem mentioned in Article 1 was the non-fixed quantity of orders and reorder point. Besides that, the quantity of order is based on the predictions made by executive chef which has mismatch between the prediction and actual sales. What was recommended is to record statical sales by the end of everyday to better forecast the future demand. Besides that, by sticking with reliable and consistent suppliers would help to determine the reorder point as the reorder lead time is fixed.
Conclusion
It is clearly that the case studies are deliberating on the supplier management positive effective and EDI system which is the initial techniques to regulate the absent implications. The choice of supplier and resource were rare and concerning the capabilities of suppliers whether they can complete their orders or not. Case study 2 focuses on standardising the layout to make easier for the staff to enter every supply room in any phase and department, and can find the right way instantly. Also, the above study show the importance of RFID web to update inventory storage and the stock replenish in spite of the requiring the actual inputs and supplies. Case three focus on the emphasising on the improvement of connection between suppliers using the lean production.
It is apparent that the business can grow and improve in the obligation due to arising concerns, for instance, working in the busy time and peak periods. Proving clear communication and moving the data between the corporation can lead to a specific suppliers and have outstanding control in the organising the supply chain. Additionally, it is of importance to have common trust and the willingness to make sure that an objective are going in the similar way with the goals and vision of the respective firms. The solution the paper offers is to forecast the demand of stock for a specific time by issuing the historical figure. It is crucial also for the firm to concentrate and evaluate keenly on the present suppliers and advance their competence, how properly they utilise the technology and how much ability required. Most of the firms have their product review and typically use the substance from their customer use and they can determine which merchandise are required and focus more on the inquired produces.
Reference Lists
Chalotra, V. (2014). An Empirical Analysis of Inventory Positioning for Pertinent Operations. [online] Publishingindia.com. Available at: https://www.publishingindia.com/GetBrochure.aspx?query=UERGQnJvY2h1cmVzfC8yNDAzLnBkZnwvMjQwMy5wZGY= [Accessed 18 May 2018].
Farsad, B. and LeBruto, S. (1993). A Measured Approach to Food-Inventory Management. Cornell Hotel and Restaurant Administration Quarterly, 34(3), pp.90-95.
Ramadhan, A. and Simatupang, T. (2012). Determining Inventory Management Policy for Perishable Materials in Roemah Keboen Restaurant. Procedia – Social and Behavioral Sciences, 65, pp.992-999.
Monczka, R. M. H. R. B. G. L. C. a. P. J. L., Sixth Edition. Applying RFID and Lean Thinking to a University Hospital. In: Purchasing and Supply Chain Management, South-Western, Cengage Learning. s.l.:s.n., pp. 635-636.
Monczka, R. M. H. R. B. G. L. C. a. P. J. L., Sixth Edition. John Deere is Looking for Lean Suppliers. In: Purchasing and Supply Chain Management, South-Western, Cengage Learning. s.l.:s.n., p. 636.
Monczka, R. M. H. R. B. G. L. C. a. P. J. L., Sixth Edition. UPS Disappoints Christmas Customers. In: Purchasing and Supply Chain Management, South-Western, Cengage Learning. s.l.:s.n., p. 631
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