Implementation of Waveriders 5-Year Inventory Management Plan - Report Example

APPLICATION OF KNOWLEDGE MANAGEMENT PRINCIPLES AND PRACTICES IN IMPLEMENTATION OF WAVERIDERS’ 5-YEAR INVENTORY MANAGEMENT PLAN Date KNOWLEDGE MANAGEMENT IN IMPLEMENTATION OF WAVERIDERS’ 5 YEAR PLAN Introduction In this part we are going to explore on a 5-year implementation plan for inventory management of WaveRiders expedition towards excellence. The paper will evaluate the plan and its contribution to the fulfillment of WaveRiders’s vision for the future. It will address the guideline deliberation in Excellence Model. The paper will also critically exhibit how the knowledge of management principles and practices would espouse the implementation of the asset management plan established. Inventories refer to the reserve of any pieceor resources that an organization uses. Inventory includes raw supplies, completed goods, supplies constituent parts and work-in-progress. A structure of record is a set of guidelines and procedures that wheel and scrutinize the inventory level. The equivalent policies institute the levels that shall be maintained. It also establishes the stock that needs replenishing, and what should be ordered. The rationale for inventory management in WaveRiders includes: To meet product demand disparity, to maintain autonomy of variation, to allow elasticity in production forecast, to provide uphold for variation in raw material delivery time, and lastly to take gain of economic purchase order size. Part 1 Every organization’s success is based on their plans, their objectives and goals and how the workforce works towards the achievement of the set goals (Alhawari et al. 2012) . As a result, most organizations create future plans that aim at shaping their future. However, the implementation of these plans affects their success almost in every case due to different factors concerned with management of the workforce and the assets available. The workforce in every organization should be its most valued inventory and as a result, there is need to synchronize functions between the work force and other factors of production (Hollensen, 2015). This would require managerial skills that would make the application of the workforce competences in implementation of plans to achieve goals a culture within the organization. This would ensure there is a coherent flow between the workforce, the resources and inventory (Antony 2012). Just like in supply chain management where there is need for communication and flow of factors of production between different departments, there is need to have the coherence and flow of ideas in the implementation of strategic plans. This is best guaranteed by the ability by the management to ensure that there is inherent understanding of the objectives and goals of the organization with regard to a given plan and control measures to guide them to produce desirable outcomes (Baños-Caballero, Pedro, and Martínez-Solano, 2014). This involves manpower management, employee training and knowledge management for purposes of completing the product life cycle. The figure below shows a model product life cycle. (Antony 2012) This management of the manpower is only part of the larger and more detailed management principle that seeks to control and manage the inventory in an organization. Inventory management is important in the success of a company and it needs to be clearly detailed and planned for to ensure that there are no unplanned pitfalls in the implementation of the plans that an organization has (Capocy, et al. 2015). . While most organizations have strategic plans that involve inventory as factors of their success, very few have set strategic plans for inventory management. This often leads to misappropriation and misuse leading to higher costs of production than intended. Inventory management involves oversight and control of the process of ordering, storage and use of different components that are used in the production process. It also involves management of quantity and quality of the finished products. The inventory is considered an important asset and is the representation of an item right from the raw material to the sale of the finished product. The inventory is also expensive as it costs money to purchase, track and insure materials and mismanagement of inventories could lead to deep financial crises and limitations for the company regardless of whether it is erroneous or as a result of untimely delivery or so. The success of inventory management is based on the creation of different plans that integrate into one inventory strategic plan. For instance, there is need to create a purchasing plan that ensures all items are available when needed. This plan should also ensure that the purchases made are neither too much nor too little. To create such plans, there are a number of theories and models that are used to ensure that there is a coherent flow in production. One such method is the just-in-time method which is a plan that ensures that the company receives material as they are needed (Chen, and David 2012). This is apt for companies that do not want to keep high level inventories or those that do not want to have their capital laying in bulk in unused inventory. The figure below is an example of an inventory system in a company that uses that method. (Dawson, 2012). The other is the material requirement planning that is used to schedule the delivery of materials based on sale projections and forecasts. An example of this is the Porter’s Inventory model shown below which uses forecasting as one of its key steps. (Allarakhia 2011) Such theories are mathematical formulations that are used to determine the order quantities and the frequencies of making the orders in order to keep the flow of production without any delays or interruptions both for the organization and the customer (Dalkir, 2013). As a result, there is need to draw a strategic plan for the inventory management within Waveriders as an SME that seeks to post optimum profits while maintaining low operational costs. Whereas there is need to keep the costs low, the pressure to use more resources is rife due to the competition, market penetration set goals and plans. This is in line with the strategic plan cycle that involves a number of process and outcomes. They include goals, desired outcomes, strategies, measures and targets and the results as shown below. (Chopra, and Sodhi 2012). As a result, the company will spend more to actualize their goals and objectives which include researching the European market pricing structure, discounts, distribution, competition, products and safety specifications in order to identify a distributor who could take on the European sales and handle any future expansion of the market. This would also create a need for new computerised finance package for Euros and to reduce Finance workload at an estimated cost of £25,000. They also aim at identifying successful European promotional campaigns and so as to put together a winning promotions strategy. This will increase their marketing expenditure to £250k. Considering that they plan to increase the price of their products by 2.5% due to inflation, they will need to spend even more to market these products at increased prices. Most of the expenditure will be used for purposes of marketing since they also plan to reorganize the Leisure sales team to three external sales representatives and three internal sales people to handle client follow-up by taking on two new salespeople and take on a European sales representative in the Rescue/Military sales team. While doing this, they plan to continue to investing in new technology costing an estimated £150k on capital expenditure. With all these plans, there is only one cost cutting measure that has been planned for and it is the reduction of the remaining clerical staff in HR to a total of one. This therefore underlines the need for the company to have a strategic inventory management plan that will help in reducing costs while increasing efficiency. Inventory management strategic planning is important in the identification of an organization’s future plans regarding the use and management of their inventory while also identifying how to achieve that. It is important to note that the planning process involves drawing continual attention to changes within the organization and its external environment (Song, Jing-Xin, and Jingjing 2014). There is need to create a plan on how to manage inventory so as to ensure that the future plans of the company are not compromised by the losses that could otherwise be made due lack of proper inventory management. There are a set of skills that are important in the management of the inventory within an organization. As a result, the process of strategic planning for the management of inventory involves many departments and personnel. Such skills when used well are important for the long-term success of an organization(Huang, and Van Mieghem 2014). The creation of a credible strategic plan to manage inventory in the next five years would be based on the use of a strategy development process chart as indicated below. (Ayub, Aslam, and Iftekhar 2013). This plan summarizes the organizational procedures that will be used in the next five years as a measure of ensuring that there is better management of the inventory for purposes of quality and quantity production for customer satisfaction. It is based on the current situation of the inventory within the company and the projected changes that will be effected based on the vision/mission statement of the company, the values and beliefs that guide it and the key objectives that are its goals. The strategic plan details how the company will achieve the targeted changes within the inventory in a span of five years and also denotes the evaluation process that will be used to gauge its progress and effectiveness (Elsayed, and Hayam 2014). WaveRiders, a company specialising in small inflatable boats for the leisure industry - their first model was an early version of the SeaSpray, used by many sailing clubs. They launched a multi-purpose high-specification boat designed for sea rescue and military use (SeaHorse). Despite being an SME, it is has majority market share in the UK. It does not have deep and elaborate systems as it still is considered small but it is in the process of making changes within its ranks. There are two major competitors in the market, Surf ZA and Hagen. Based on turnover, WaveRiders is currently in the top 5. They all offer a similar product range although the two have a broader range of boats. They are WaveRiders’ biggest competition and they have driven WaveRiders to invest in technology and also change their current marketing plans. The company was hit by the global economic crises but it seems to be rising from that. There are a number of issues that need to be considered within the company so that they can be optimized to increase production while reducing cost. This includes the inventory management. There is need to ensure that the inventory is well managed in consideration of its importance to the structure and functions of different departments inside and outside the company (Chopra, and Sodhi 2012). The various factors of inventory management are graphically represented below. (Shukla & Uttam 2015) Proper management of the inventory within WaveRiders will ensure that the company completes the inventory process in light of management’s best practices. Below is a model inventory process. (Elsayed, 2014) The management of the inventory is based on the interdepartmental communication where daily folios are filled and stock is taken. Using this, different models adopted within the company can be used to make orders. The orders are guided by demand, market and availability of inventory within the company. It will help ease the process by taking them full circle right from the client to the suppliers without any glut (Chen, 2013). Part 2 The use of different asset management tactics within a company without clear training, duties and responsibility definition and manpower management could prove futile if there are not specific strategies that are taken to ensure that there is knowledge management that will be used to implement the strategic plan. As a result, there is need to ensure that the knowledge management process is used (Dawson, 2012). With knowledge management WaveRiders can capture and develop organizational knowledge then share it effectively within the company to help in creating best practices that will help them achieve their objectives using the best knowledge use. They should use an integrated system that incorporates management and information systems management. Knowledge management can be used as part of the comprehensive business strategy and inter-departmental liaison (Stanger, Richard, Yates, and Sue Cotton 2012). The knowledge management efforts should be in line with the objectives of the company and the set goals. As such, in creation of a strategic plan for the management of inventory at WaveRiders, knowledge management should be used to improve the performance of the company while increasing their competitive advantage. This is particularly important for purposes of innovation, sharing of information and integrating continuous improvement. The management of knowledge is a strategic asset that should be used to encourage sharing of knowledge in theories of organizational learning. The process of knowledge management is as illustrated in the figure below. (Sveiby, 2005). An evaluation of the manpower competence within the company should be made to ascertain what is good and what is not. A non-prescriptive excellence model is best suit for purposes of creating an internal best practice model based on the unique features of the company and skills and competences of the employees. Such excellence models drive the company towards being more competitive. A best practice approach should be designed from that (Arıkan, Johannes and Ries 2014). The employees should then hold training sessions to disseminate what they propose as the best practise model. They should it should then be passed as the inventory policy within the company with the details well indicated and the policy well shared through seminars and so on (Allarakhia and Steven 2011). Resource Utilization The essence of inventory management is in managing the resources within the company. This would require the use of different resource utilization models and theories. Such theories are best created using organizational learning as they are best drawn from within the company based on its principles and culture. The example below shows an excellence model that is created using the flow of needs from one department to another with an aim of proper inventory planning within the company. It exemplifies how different departments can be involved in the creation of an inventory strategic plan (Steffens et al. 2014). Such planning can be done using a model like the one indicated below; ( Tempelmeier, 2011) Total Productive Maintenance (TPM) Total Productive Maintenance is a model within knowledge management that can be used within the company to enhance inventory management. It involves a comprehensive personnel management based on duty and responsibility sharing. It is a model that can be used to streamline personnel involvement and enhancement within the company so as to have a clear performance management and progress management model (Tempelmeier, 2011). The people involvement and enhancement model is as illustrated in this figure: (Mishra, Panda, and. Misra 2014) Conclusion The creation of strategic plan to manage inventory within an organization is perhaps the biggest impetus towards asset management and consequently financial security due to the management of resources. Companies that want to achieve their goals within their budgets and timelines must be willing to create comprehensive strategic plans on management of their inventory (Wiig, 2012). Considering that knowledge management is an important aspect in the management of inventory, the creation of a strategic plan must therefore consider knowledge management. This especially true since inventory management involves interdepartmental communication and there is need for streamlining the workforce (Zhou, and Yu 2011). References Alhawari, Samer, Louay Karadsheh, Amine Nehari Talet, and Ebrahim Mansour 2012, "Knowledge-based risk management framework for information technology project." International Journal of Information Management 32, no. 1: 50-65. 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