Major Facts
The manufacturing company needs to improve its balance sheet and P & L. this it seeks to do through reduced inventory and associated carrying costs. It is essential that this is done in a manner that enhances customer service at the same time. Currently, the product being used to support the different customer channels vary from costly long-lead time set systems to comparatively low-value standalone units supporting personal computers. The current inventory carrying costs are high according to the established performance benchmark.
Major Problems
There are challenges in managing the broad mix of products required as well as large amounts of obsolete and slow-moving inventory as far as inventory management is concerned.
Delegate your assignment to our experts and they will do the rest.
The other problem with the change management is establishing the impact on profit from the scrapping of obsolete inventory to enhance the balance sheet.
The other challenge is finding a mechanism upon which to institutionalize a program to avert the buildup of obsolete inventories by scrapping of slow movers on a consistent basis.
Possible Solutions
As far as purchasing and materials management is concerned, it is essential that the overall purchasing power of the business be leveraged to secure a more substantive purchasing and consignment agreements. This can be done by consolidating the purchasing function.
Additionally, the functions of local materials management should be strengthened to enhance the usage of requisitioning and materials. Additionally, upstream supply chain partnerships should be embraced to improve the flow of material while reducing inventories on purchased parts.
Reducing the lead times can be done in different ways, one of which would be through updating the technology used. This will come in handy in establishing a fixed schedule for ordering stock at the same time each month (Wild, 2017). By doing so, it becomes easier for the company to develop a fixed timetable for ordering consumable commodity periodically.
Choice and Rationale
Reducing lead times is the most effective solution in this case. This is because it goes a long way in not only upholding the efficiency of inventory flow but also effects the other spectrums of operations. For instance, reducing lead times also reduce the supplier side of lead times, therefore, minimizing some inefficiencies from the supplier. It enhances the corporation between the company and the suppliers to reduce the company's lead times, thereby potentially looking at ways to forecast and map out future demand by the clients so that the suppliers are better placed to have the resources in place to cope with fluctuations in the company's demand. Reducing lead times also affects the way and mode of handling goods for the company at the transportation stage (Christopher, 2016). This involves looking at more efficient ways to transport goods, which could be through a different mode of transportation altogether, or through increasing loading factors so that the time taken to move the goods to the consumer is reduced.
Implementations
The plan to implement the supply chain reduced lead times involves using a domestic supplier. It is essential first for the company to identify local suppliers to use instead of foreign suppliers who would take longer to connect with the company. The next stage in this implementation would be increasing order frequency. By ordering more frequently, it becomes easier for the company to stock the resources needed hence making them readily available. The other important step is providing a sales forecast. This means notifying the supplier of when to expect reorders based on the company's actual sales data. This comes in handy in helping the supplier anticipate the company's needs and therefore speed up the fulfillment process (Hartley, 2017). The supplier can set the company's usual order aside and have it ready to ship whenever the company gives the green signal.
References
Christopher, M. (2016). Logistics & supply chain management . Pearson UK.
Hartley, J. R. (2017). Concurrent engineering: shortening lead times, raising quality, and lowering costs . Routledge.
Wild, T. (2017). Best practice in inventory management . Routledge.
