C20 Company: Inventory Management - Case Study Example

A. Inventory management Just like any other organization or a business oriented Company, C20 also manages its inventory department. Management of the inventory refers to that the management any organization, firm or company undertakes efficiently to oversee that there is constant flow of the units in and out of the firm’s existing inventory (Toomey, 2000). It must involve the transfer control of in of the units for the purpose of avoiding the inventory becoming high or reaching to some levels that pose a dander to the firm. There are many ways that the company uses for inventory management (Toomey, 2000). It ensures that the costs that are associated with inventory are controlled. There are two major ways that the company achieves this: I. Through control of all perspective in the total value of the company’s good II. The burden in terms of tax that is generated through the total cumulative value of its inventory The following the three main areas the company must pay attention as far as inventory is concerned (Toomey, 2000); Time: this is with reference to the materials that are acquired for the purpose of being included in the company’s total inventory. It is vital that materials ordered meet the production requirements of a company and that produced products do not accumulate in the firm’s store. C20 Company seems to produce products without having to consider what has been ordered. The firm adopts a management style whereby it ensures that products are always available for immediate shipping in case a customer orders such products. This seems to increase inventory costs since the firm is required to cater for warehousing costs for finished products in addition to materials for producing such products. C20 Company could reduce this inventory costs by employing just in time inventory management strategy. This will allow the firm to produce products once they are ordered and deliver them on promised time. Employing this strategy will imply that the firm will not incur much costs for storing finished goods and production materials. However, the downside of this is that since some materials are sourced from other countries such as French, it might result in delays and as such, the firm might decide to outsource from local company to be supplying these materials. This will allow the procurement department to reduce the time that the supplies are likely to take between the moment it receives the order and the moment it delivers the order to the company. Time taken to process order By reducing the time taken to deliver products from when they are ordered, the firm will ensure that its customers remain loyal and at the same time manage its inventory efficiently. This will also enable the firm to only stock materials that are urgently required to initiate the process of production while awaiting other materials to be supplied. As such, the firm also needs to have buffer stock. Another strategy is the use of buffer stock calculation. The buffer stock refers to the stock that is beyond the minimum required number of units to ensure the level of production is maintained. The company in some ways lacks some spare parts for the machinery that is used in its operations (Finlay, 2000). Although this reduces inventory, any breakdown of machinery will imply that there will be some delays in delivery of products to customers on time. as such the firm need to have buffer stock of spare parts especially those that are not locally available to ensure that strict management of inventory does not interfere with timely delivery of products to the customer. In addition, the firm ought to have some raw materials especially those that are not available locally to ensure reduction of time required to deliver finished goods to customers. Most of the inventory management of the company is limited to keeping of the records of the raw material that are delivered in the company as well as their movement into the processes of production. This means that it is also very important for the company to put a record of the movement of these materials through all the production or operations processes within the company (Finlay, 2000). This is also called the process of tracking the materials as they get used for the process of creating finished products. It is a very important process because it enables the company to identify any need to order more materials before the inventory runs low to a very unfavourable level. The company must ensure that all the records are kept accurately the records of all the finished goods ready to be shipped or the services that have need offered. This means the company must ensure that all the shipped goods must be subtracted from the records of the total available goods for sale as well as the ready produced goods are put in the inventory waiting to be shipment. It should be noted that since the company has no return policy, it should formulate one for recording the goods that will be returned by the customers (Toomey, 2000). The goods can also be recorded again as second grade quality goods. The figures must also be accurately maintained for the purpose of quick convey of the message to the sales personnel for efficient record keeping. Besides maintain the volume as well as the movement of the inventories, the company must ensure that accurate records must be prepared and especially with reference to the taxes accessed due on all types of the inventory (Toomey, 2000). This is because lack of each unit volume data of the overall production will cause the company difficulties in calculation of the total tax amount hence losses as due to tax underpayment the company incurs penalties due to some of the independent audit. B. Quality as an operations management concept Quality is very important for the company’s product. This is because it is what determines the share of the market the company gets as well as its competitive advantage due to the level of customer satisfaction (Hill & Jones, 2007). It should be noted that in the fireplace quality is key in the purchase of the fire machines and equipments, which must be durable and made of high heat resistance material. This explains why most of the fire products that are installed in most of the houses should be safe for use. The company is currently using a very poor method and is likely to be the cause of poor quality production. This explains why there company need to adopt a better way of processing the tiles. Quality must be maintained in all processes of production as shown in the figure below: The company deals with a continuous form of production whereby the facilities in the company are sequence arranged to ensure production of tiles follows from the first stage to the last stage of production. This ensures there is a high rate of production and it has been able to accommodate people with limited skills. It should be noted that the production of any product in a company must be totally based on the needs of the customers. According to the feedback that was given to the company around 30% of the customers needs are never satisfied. This is because as much as the company has been producing goods they term as of high quality it not necessarily the same feeling from the customers because the right quality does not denote the best quality (Peter, 2007). Some aspects like the product cost as well the technical characteristics with reference to the product characteristics are important. Quality demands production that is based upon the right time, right cost management, right quality and right quantity. Ways for achieving a high quality tile production Employment of new and more skilled human resource: Human resource strategy models must be applied. They are the practices as well as policies that the management of an organization uses to design the work as well as select develop and train, motivate, appraise and control the employees in the organization (Heizer, 2011). There are three models of namely the control based, resource based and then an intergraded model, which combines the first two. Control based type of model involved in the strategic management of the human resource globally, entails the ways in which the management tries to control as well as monitor the role of the employees in the performance of the organization. It is very important for any management to be able to control the behaviours of the employees in the organization because if they cannot then it means the achievement of the organization’s goals and objectives may not be reached. This means that any organization must be in a position to transform its labour power into labour itself. This will be done through ensuring that all the employees that are hired have the capacity to do the work (Heizer, 2011. In addition, it is very important for the management to understand that all of the workers have very different needs. The workers behaviour enables the management to be able to control the operations of the organization. Resource based model entails reward efforts through the process of managers viewing their employees as the organizations assets (Heizer, 2011). Thus to improve quality C20 needs to invest much in its human resources by ensuring continuous training and development of its employees, motivating them through things such as rewards, competitive remuneration packages, hiring of talented employees, and putting in place quality control standards that are expected out of each employee. Quality control: This refers to the system a company adopts to ensure it maintained the desired level of the quality in the services or products. It will aim at ensuring all the defects are controlled at the source level, an effective system of feed back is in place and procedures of corrective actions are implemented. This will improve the company’s income because the products will be highly acceptable to the customers, customer satisfactions will also be achieved, and inspections will be prompt for the purpose of ensuring the quality is controlled, any variation in the manufacturing process is identified Acquisition of new machineries: C20 needs to adopt new technologies via acquisition of new machineries and communication to ensure high quality production and timely delivery of finished products (Peter, 2007). This will imply that the firm will have to invest more in training the employees on how to run such new machineries to ensure that the required quality is attained. This will enable the company to increase production and at the same time increase quality. In the end, such ventures will reduce the cost of production (Peter, 2007). Bibliography Finlay, P. 2000. Strategic management: an introduction to business and corporate strategy. New York: Pearson Education. Heizer, H. 2011. Principles of operations management. Upper Saddle River: Prentice Hall. Hill, C. & Jones, G. 2007. Strategic Management: An Integrated Approach, 8th Ed. California: Cengage Learning. Peter, F.2007. The practice of management. New York: John Wiley & sons. Toomey, J. 2000. Inventory management: principles, concepts and techniques. Canada: Springer Read More