Operations Management For Purchasing And Inventory

The current purchasing and inventory management

Describe about the Operations Management for Purchasing and the Inventory.

This study is helpful to develop the concept of operation management. The purpose of this study is to understand the purchasing and the inventory management of Brisbane outdoor power centre. In this context, this study has aimed to identify the present purchasing and the inventory management procedure used by this particular company. In addition, this study has highlighted the comparative advantage as well as comparative disadvantage of the presently used approaches. Based on the comparative disadvantage, the company can improve their business performance in the future (Agrawal & Smith, 2013). Moreover, this study is also very helpful to understand the supply chain management and the inventory management. These will effectively increase the efficiency level of the company and therefore, it can be mentioned that the profitability level of the business will be increased (Barney, 2012). These supply chain management and the inventory management can also reduce the investment whilst in order to maintain the relevant level of the stock, this has also discussed in this study. This study is also beneficial as this study has tried to recommend to Ms Green in order to restructure the purchasing and the inventory functions of Brisbane outdoor power centre.

As per the case study, it can be stated that Brisbane Outdoor Power Centre operated three retail locations across the Queensland city of Brisbane. Belinda Green had worked in this company at Brisbane Outdoor for ten years (Bauer et al., 2012). Now Green is working as the Branch manager in the north side centre in Strathpine. When Green had toured the three centres, then during the week of consultation, thinking and the introspection, the performance of the business was different. In this context, it can be observed that the function of these three businesses was also different, but, Chen & Simchi-Levi (2012) mentioned that they have higher cooperation between the businesses.

Moreover, it can be observed that as Brisbane outdoor is a retail power centre; therefore, this company required a greater investment stock. As a result, it can be mentioned that this greater inventory stocks were needed for managing the company’s investment (Chicksand et al., 2012). In this case, the Saxon’s Laissez faire procedure of a business could highlight the necessity of the inventory of the business and could identify the odd purchasing and the inventory management customs. In addition, each of the stores has performed their operations autonomously and individually. Whilst several stock items were shipped among the stores while the shortages occurred. In this connection, Cobb, Rumi & Salmeron (2013) mentioned that the integrated services were absent during the time of transportation.

The comparative advantages and disadvantages

On the other hand, it can be mentioned that the most of the products or brands were differentiated from one store to other. Consequently, it can be stated that the inventory managers of each of the several stores had their own and different sourcing and purchasing in order to control the inventory and purchasing strategy of the stores. As per the statement of Giunipero, Hooker & Denslow (2012), appropriate inventory and purchasing management is important for a business in order to control the supply chain management of a business. Moreover, it can minimise the cost of the labour. More precisely, it can be mentioned that the inventory managers of the organisations are able to assess the inventory asset valuation and then can make the financial reports. Furthermore, with the help of the inventory management, the company can provide the sufficient inventory to their supply chain partners. Gong, Chao & Zheng (2014) added that inventory in the account of the organisations will reflect the consumers and will satisfy the investors.

Adantage:

According to Miemczyk, Johnsen & Macquet (2012), the inventory management strategy can increase the accuracy of the inventory orders. The comparative advantages are:

The ideal inventory management would reflect the business to identify the quantity of inventory, which is required to hold in the company’s account. This would in turn reduce the problem of product shortages.

On the other hand, another comparative advantage of the inventory and the purchasing management of the Brisbane Outdoor Power Centre can be discussed as it had monetary benefits (Ozguven & Ozbay, 2013). In this connection, inventory management would lead to the company to save money; hence, the wastage of the slow moving products would be occurred.

Inventory management would be helpful to enhance the cost efficiency of the firm. As a result, the productivity of the company would be increased. In this purpose, it can be mentioned that with the rise in the productivity, the business would be able to meet the demand of the consumers (Pooler & Pooler, 2012).

Furthermore, it can be seen that the retail consumers were satisfied with the operations and the performance of Brisbane Outdoor. The organisation has greater knowledgeable employees, greater quality of merchandise along with the company provided greater service to the consumers after sales. As a result, the consumers admitted that Brisbane Outdoor Power centre was one of the best companies within the industry (Raviv & Kolka, 2013).

How the supply chain and inventory management enhance the efficiency

Disadvantage:

On the contrary, it can be stated that Green was not influenced with the current performance of the inventory management and the purchasing management of the company. He identified that the present approach was not highly effective or sustainable. In this occasion, it can be mentioned that the rough Pareto analysis could effectively recommend the rationalisation of the procurement. In addition, Pareto analysis could significantly recover the substantial, the financial and the operational gains. Moreover, as per the statement of Ryu et al., (2013), Pareto analysis could minimise the inaccurate stock records. However, if the suppliers would not able to deliver the products to the consumers within appropriate time, then by following the Pareto analysis, the behaviour of the suppliers would be improved.

The concepts of supply chain management:

In the points of Sahari, Tinggi & Kadri (2012), supply chain is helpful for a business as it can minimise the cost of the products and can increase the efficiency of the business. In most of the business, it can be observed that wastage of resource is the most effective source, which can improve the cost of the production. The reason can be mentioned as due to the improper planning, the production costs of the business have increased.

Song, Dong & Xu (2014) opined that the supply chain management can increase the efficiency by following the value added activities. As a result, it can be mentioned that the performance of the Brisbane Outdoor Power Centre company will be improved the entire approaches by the business will flow smoothly (Miemczyk, Johnsen & Macquet, 2012).

On the other hand, inventory management can increase the efficiency and the productivity of a company. These will significantly the sales of the company. The company will earn higher profitability. The customers will be highly satisfied as the consumers get the delivery of the products within the mentioned time (Xu et al., 2013).

Effect of supply chain management:

In order to discuss the advantage of supply chain management, it can be mentioned that supply chain management is able to reduce the capital investment. This can be possible with the help of the maintaining of the additional stocks. The necessary requirement would be evaluated and therefore, the stocks can be maintained as per the requirements (Sahari, Tinggi & Kadri, 2012). As a result, it can be mentioned that there will be no excessive stocking.

Moreover, it can be added that the supply chain management can reduce the investment in order to determine the assets and the inventory to summarize the return on the investment. This will increase the return on assets as well as the return on the capital investment. The economic profitability will be improved.

How the supply chain and inventory management reduce the investment

According to Raviv & Kolka (2013), inventory management can reduce the investment in order to maintain the smooth cash flow for the business. On the other hand, lower investment will lead to the lower capital stock and it will increase the space of the storage for the greater selling items. As a result, it can infer that return from the business will be significantly increased. Customer satisfaction level will also increase (Pooler & Pooler, 2012).

It can be observed that Ms Green was not pleased with the service and the performance of the purchasing and the inventory management. As a result, this study is beneficial to restructure the purchasing and the inventory functions. In this regard, Miemczyk, Johnsen & Macquet (2012) mentioned that a relevant action plan is important to restructure the purchasing and the inventory functions of an organisation. In order to develop an action plan, the company requires to follow two task forces. The first task force recognises the main cause and can identify the approach in order to decrease the obsolete stock level within the country (Ozguven & Ozbay, 2013). On the other hand, as per the second task force of the proposed action plan, the company requires to sell the stock of the business more significantly. Moreover, the excess stocks of the company, which have obtained from the ineffective sales prediction or ineffective business planning. In addition, the inventory leaders develop some reliable approaches in order to determine the reason why the level of stock has been increasing with the rise in the time. In this purpose, Raviv & Kolka (2013) cited that the importance of the action plan is also required to understand, which will be helpful to restructure the purchasing and the inventory functions (Gong, Chao & Zheng, 2014).

In order to perform the business operation based on the proposed action plan, the steps can be discussed briefly in the following:

Plan	Time schedule
Develop the inventory optimisation tools	5 days
Recruit knowledgeable workers for the business solution	2 weeks
Supervise the performance of the employees	During the business operation
Maintain good relationship with the suppliers	During the business operation
Follow the slow moving approach	1 week
Follow the work slotting	2 weeks

Conclusion

This study has highlighted the concept of operation management. In this context, this study has tried to establish the purchasing and the inventory behaviour of the Brisbane Outdoor Power Centre. In this context, this stud has aimed to identify the present purchasing and the inventory management procedure, which has used by the company. After the discussion, it can be observed that the three different stores of this company have performed different purchasing and inventory management operation. On the other hand, it can be stated that this study is helpful to identify the comparative advantage and the comparative disadvantage of the existing inventory and purchasing management. Moreover, this study is helpful to understand the reason why supply chain management and the inventory management is able to increase the efficiency level and can reduce the investment whilst. Lastly, this study is important to focus to restructure the purchasing and the inventory functions of the company. In this context, a relevant action plan has been mentioned in this study.

In this study, it can be observed that Green was not satisfied with the purchasing and the inventory management performance of the Brisbane Outdoor power centre. In this context, the benefit of the Pareto analysis has been discussed. On the other hand, in order to restructure the purchasing and the inventory function, a relevant action plan is required to develop. In this respect, the benefit of the action plan has been mentioned. Moreover, the approaches of the action plan have been discussed in this study. With the help of this action plan, the probable time schedule of the plan can be determined.

References

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Barney, J. B. (2012). Purchasing, supply chain management and sustained competitive advantage: The relevance of resource?based theory. Journal of Supply Chain Management, 48(2), 3-6.

Bauer, D. G., Campero, R. J., Rasband, P. B., & Weel, M. D. (2012). U.S. Patent No. 8,321,302. Washington, DC: U.S. Patent and Trademark Office.

Chen, X., & Simchi-Levi, D. (2012). Pricing and inventory management. The Oxford handbook of pricing management, 784-822.

Chicksand, D., Watson, G., Walker, H., Radnor, Z., & Johnston, R. (2012). Theoretical perspectives in purchasing and supply chain management: an analysis of the literature. Supply Chain Management: An International Journal, 17(4), 454-472.

Cobb, B. R., Rumi, R., & Salmeron, A. (2013). Inventory management with log-normal demand per unit time. Computers & Operations Research, 40(7), 1842-1851.

Giunipero, L. C., Hooker, R. E., & Denslow, D. (2012). Purchasing and supply management sustainability: Drivers and barriers. Journal of Purchasing and Supply Management, 18(4), 258-269.

Gong, X., Chao, X., & Zheng, S. (2014). Dynamic pricing and inventory management with dual suppliers of different lead times and disruption risks.Production and Operations Management, 23(12), 2058-2074.

Miemczyk, J., Johnsen, T. E., & Macquet, M. (2012). Sustainable purchasing and supply management: a structured literature review of definitions and measures at the dyad, chain and network levels. Supply Chain Management: An International Journal, 17(5), 478-496.

Ozguven, E. E., & Ozbay, K. (2013). A secure and efficient inventory management system for disasters. Transportation research part C: emerging technologies, 29, 171-196.

Pooler, D. J., & Pooler, V. H. (2012). Purchasing and supply management: creating the vision. Springer Science & Business Media.

Raviv, T., & Kolka, O. (2013). Optimal inventory management of a bike-sharing station. IIE Transactions, 45(10), 1077-1093.

Ryu, K., Moon, I., Oh, S., & Jung, M. (2013). A fractal echelon approach for inventory management in supply chain networks. International Journal of Production Economics, 143(2), 316-326.

Sahari, S., Tinggi, M., & Kadri, N. (2012). Inventory Management in Malaysian Construction Firms: Impact on Performance. SIU Journal of Management, 2(1), 59-72.

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.

Xu, J., Zeng, Z., Han, B., & Lei, X. (2013). A dynamic programming-based particle swarm optimization algorithm for an inventory management problem under uncertainty. Engineering Optimization, 45(7), 851-880.