How to Create a Purchase and Inventory Plan

Appropriate Inventory Mix for Product Production 

In determining the ideal inventory mix required for producing its products, it should emphasize specific points it would utilize to avoid stalling sales. By emphasizing on average sale amount, the number would give the company the price point, which drives its sales. The inventory mix in this sense should point the company’s customers to the price point. Also, the average turnover rate will allow Healthy Treat Cookies to determine the items that then the slowest, fastest, and consistently across the year. It will ensure to categorize the items based on these groups (Bandaly & Hassan, 2020). In the case of the slow movers and selling off items, Healthy Treat Cookies will need to liquidate the inventory that moves slowly, even those below-cost pricing, allowing the organization to recoup cash it would utilize to realize growth.

Determining Efficient Inventory Levels 

In determining efficient inventory levels for every component material Healthy Treat Cookies will require to reduce costs of inventories, the company should first emphasize determining the amount its inventory will carry. It should then divide the cost of all the inventory it processes or sells by the number of days the inventory would last, allowing the company to get the cost of the inventory it will require daily. It should then divide the cost of the inventory it presently keeps with the result from the prior calculation, representing the number of days its inventory would last prior to being used up (HR & Aithal, 2020). From here, Healthy Treat Cookies should contact its supplier to know the highest frequency products would be delivered, facilitating an arrangement for a schedule that would meet the company’s needs.

Determine Staffing Needs (Contract Negotiators, Inventory Managers, Shipping Clerks) 

Contract negotiators at Healthy Treat Cookies will ensure positives ensuring benefits for both the company and its vendors. These will facilitate in signing contracts that will offer a solid foundation for developing solid relationships with vendors. On inventory managers, they will be accountable for managing and controlling inventory, protecting from damaged or incorrect goods being shipped. This enhances customer experience, safeguarding from issues, including refunds, and attain additional repeat buyers (Darmawan, Wong, & Thorstenson, 2018). In the case of shipping clerks, they will ensure the accurate keeping of records for all products shipped and received and provide an update of accurate inventory records.

Determining Storage Needs 

Ideal storage of the products Healthy Treat Cookies produces would allow it to preserve their nutritional value and quality in line with ensuring customers make use of the food dollar due to lack of spoilage. Also, appropriate food storage will help in preventing illnesses that result from bacteria. Also, proper storage will facilitate in preventing losses from pilferage, damage, and quality deterioration. The organization will need to ensure it stores its products in clean and quality containers to avoid contamination (Liu, Zhang, Zhou, & Ru, 2018). Healthy Treat Cookies will also need to ensure that the storage containers have not served other purposes.

Evaluating Uses 

Economic Order Quantities 

When Healthy Treat Cookies realizes constant demand for its products for more than a year and delivers new orders fully when inventory reaches zero, it will offer economic order quantities. It will place fixed costs for every placed order irrespective of the ordered unit numbers. Costs held in storage will also be considered under the holding cost, which will be expressed as a percentage of the item’s buying price (Bandaly & Hassan, 2020). Healthy Treat Cookies will do this to determine the optimal unit numbers to reduce the overall cost affiliated with the delivery, purchase, and storage of its products.

Quantity Discounts 

Healthy Treat Cookies will provide quantity discounts, which will serve as incentives provided to Healthy Treat Cookies’ customers, which will lead to reduced cost per unit of material or goods when bought in high numbers. The company will offer quantity discounts to customers to entice them to purchase larger quantities (HR & Aithal, 2020). Healthy Treat Cookies will move more materials or goods, and customers will receive favorable prices. Customer discounts will comprise purchase two get one free.

Automatic Inventory Systems 

An automated inventory system in the organization will allow Healthy Treat Cookies to add, edit, transfer, and edit inventory in real-time. The system will ensure the company pulls inventory counts from its suppliers utilizing data that will feed into its own system (Bandaly & Hassan, 2020). The initiative will allow Healthy Treat Cookies to realize improvements in customer satisfaction and inventory management, which will add to its overall profitability.

Lean Approaches 

The Kaizen method is the proper method that will meet Healthy Treat Cookies’ operations. The lean tool facilitates continuous quality improvement, processes, technology, productivity, safety, and company culture, essential to Healthy Treat Cookies. The lean approach will leverage ingenuity and knowledge from all employees in the organization, allowing suggestions to originate from every aspect of the business, including management, procurement, production, finance, and logistics among others (Liu, Zhang, Zhou, & Ru, 2018). It will facilitate continued changes with significant improvements in safety, productivity, and effectiveness while minimizing waste.

Tracking Purchasing and Inventory Levels 

The ideal system that will allow Healthy Treat Cookies to track its purchasing and inventory levels is ERPAG. The program is an ERP cloud service, which covers various business processes for organizations, such as Healthy Treat Cookies. It facilitates order management and inventory in real-time (HR & Aithal, 2020). The features it will offer the company will entail order fulfillment, reordering, multiple warehouses, cloud label printing, multi-language interface, and inventory tracking, including Serial, Lot, and Barcode.

Determining Appropriate Inventory Level 

In allowing Healthy Treat Cookies to determine the ideal levels of finished products it should have on hand, it will require to follow the Lead-Time method. Lead time will provide the company with a means of factoring in replenishment in the inventory plan, while it might vary from weeks to months. The approach is the time of placing an order with a vendor to when the raw materials reach Healthy Treat Cookies’ stores. Since the cookies the company manufactures have a shorter led time, the product might sell rapidly (Darmawan, Wong, & Thorstenson, 2018). In this sense, it would be ideal to reserve inventory in the warehouse for the products to replenish back to the company’s stores, which sell out of the products the company manufactures.

Storage Needs and Green Approach 

Since Healthy Treat Cookies deals in the manufacture of products that customers consume, cookies, it requires ideal storage approaches that will ensure its goods are not damaged or contaminated. In realizing its green storage goals, Healthy Treat Cookies will require shifting to energy-saving lighting, which will allow it to realize cost savings and minimize energy utilization. It will also need to purchase used fixtures, which will provide it with an ideal means of recycling and saving money, especially by emphasizing natural storage materials as opposed to spending heavily on purchasing shelving made from practice or metal (HR & Aithal, 2020). Healthy Treat Cookies will also need to establish a living wall, allowing it to enhance air quality with a wall comprising of indoor plants situated under air-conditioning vents.

Staffing Needs (Sales Personnel, Warehouse Personnel) 

On sales and warehouse, Healthy Treat Cookies will require both sales and warehouse personnel. Salespersons embark on selling, with their duty comprising meeting prospects, demonstrating, and presenting the products of the company, inducing prospects for purchasing, taking orders, as well as affecting sales. The salespersons will guide the buyers into purchasing the products by Healthy Treat Cookies and attending to the complaints customers might have concerning the products, and addressing their grievances immediately and sincerely (Bandaly & Hassan, 2020). Regarding the warehouse personnel, they will be accountable for performing distinct duties, including receiving and processing incoming materials and stock, pick and fill stock orders, pack and ship orders, as well as receive and organize orders.

Forecasting Future Growth in Production and Sales 

In forecasting the future growth in both production and sales in the future, Healthy Treat Cookies will use the sales-force composite approach. The approach is usually derived by gathering approximations from the different salespersons in the company. Salespersons understand their region and territory better than others within the company. These will have first-hand information since they will contact customers directly. They will submit their sales estimations expected for the regions Healthy Treat Cookies anticipates selling its products. The addition of estimates of the sales individuals will facilitate sales forecasting (Darmawan, Wong, & Thorstenson, 2018). The forecasts will be submitted monthly, with the data acquired guiding the expected units to be produced in the company, avoiding excesses or shortages in supplies.

Possible Technology for Logistics Management and Transportation Processes Tracking 

In managing logistics and tracking the transportation process, the ideal technology for Healthy Treat Cookies use will be Oracle Transportation Management Cloud. The program will facilitate in planning routes, invoice, and freight management for delivering product orders to customers. The technology will introduce accountability, transparency, and planning into the freight cost of Healthy Treat Cookies’ inbound and outbound freights. It will help the organization in calculating overheads efficiently and delivering the pricing build into the products the company produces (Bandaly & Hassan, 2020). The technology will allow Healthy Treat Cookies to plan orders early upon placement or even during inventory allocation, while it will be easy to sync with the Healthy Treat Cookies’ ERP system, facilitating consistency in order, route, and delivery processes.

Conclusion 

In conclusion, the purchase and inventory plan for Healthy Treat Cookies emphasizes various critical areas that will ensure the organization undertakes its operations efficiently. It determines the ideal inventory mix for producing the product, the efficient inventory levels for every component material required for reducing inventory costs, staffing needs for contract negotiators, inventory, managers, and shipping clerks, and storage needs for the company. Also, it evaluates the specific areas, including economic order quantities, quantity discounts, automatic inventory systems, and lean approaches, and develops a system for tracking purchasing and inventory levels. The plan also determines the appropriate inventory levels of finished products to have on hand, storage needs including green strategies, and staffing needs for sales personnel and warehouse personnel. Additionally, it considers forecasting for future growth in both production and sales and identifies possible technologies the company can use to manage logistics and track the transportation process. In this sense, the purchase and inventory plan will be crucial to further the competitive and business interests of Healthy Treat Cookies. The plan will need cooperation and coordination and involve all stakeholders to facilitate successful purchase and inventory planning.

References 

Bandaly, D. C., & Hassan, H. F. (2020). Postponement implementation in integrated production and inventory plan under deterioration effects: a case study of a juice producer with limited storage capacity. Production Planning & Control, 31 (4), 322-337.

Darmawan, A., Wong, H., & Thorstenson, A. (2018). Integration of promotion and production decisions in sales and operations planning. International Journal of Production Research, 56 (12), 4186-4206.

HR, G., & Aithal, P. S. (2020). Integrated Inventory Management Control Framework. International Journal of Management, Technology, and Social Sciences, 5 (1), 147-157.

Liu, H., Zhang, J., Zhou, C., & Ru, Y. (2018). Optimal purchase and inventory retrieval policies for perishable seasonal agricultural products. Omega, 79 , 133-145.