How do we reduce inventory levels? 1. What would the impact be on profit from the disposal of obsolete inventory in order to improve the balance sheet?? 2. How do we institute a

Supply Chain: Inventory Management Case Study

How do we reduce inventory levels?

A manufacturer of computer peripheral devices was look-ing to improve its balance sheet and P

& L by reducing inventory and the associated carrying costs, while improving customer service.

The products required to support different customer channels varied from expensive long-lead

time engineered systems to relatively low-value standalone units that supported personal

computers. The company needed to completely revamp its inventory, manufacturing and product

support policies, procedures and practices to reflect the dramatic and fast changes to its product

line.

The two main questions that needed answered were:

1. What would the impact be on profit from the disposal of obsolete inventory in order to

improve the balance sheet?

2. How do we institute a program to prevent the buildup of obsolete inventories by

disposing of slow movers on a regular basis?

Establish performed a logistics cost/performance bench-mark for all of the divisions showing

that inventory carrying costs were extremely high. The bulk of the problem was in inventory

management, there were problems managing the broad mix of products required as well as large

amounts of obsolete and slow-moving inventory.

A cross functional team was formed that included members from Operations, Marketing, Sales

and Finance to evaluate and dispose of excess and obsolete inventories.

The process of creating inventory was benchmarked to “best-practices” to identify improvement

opportunities in purchasing, materials management, inventory planning and management, and

the manufacturing operations.

In purchasing and materials management it was recommended that the total purchasing power of

the corporation be leveraged to obtain more favorable purchasing and consignment agreements

by centralizing the purchasing function. At the same time, local materials management functions

could be strengthened to improve requisitioning and materials usage and upstream supply chain

partnerships were established to improve material flow and reduce purchased parts inventories.

In inventory planning and management, a centralized logistics function was recommended.

Written policies and procedures were developed for inventory planning, management and

reporting, and a new forecasting and inventory planning business process and information

system was implemented. All inventories are now managed more intensively to avoid excess and

obsolete inventories and active inventories are deployed and re-deployed based on well defined

forecast requirements.

The promotion process was also brought under control to avoid sudden unanticipated demand on

the plants, and manufacturing performance criteria was changed from lowest unit cost and high

absorption to meeting the schedule in time and quantity to improve customer service levels.

http://www.establishinc.com/inventory-management

Case study

There are two different approaches to case studies

Type 1: The analytical approach

The case study is examined in order to try and understand what has happened and why. It is not necessary to identify problems or suggest solutions.

Type 2: The problem-oriented method

The case study is analyzed to identify the major problems that exist and to suggest solutions to these problems.

The problem-oriented method

A successful case study analyses a real life situation where existing problems need to be solved. It should:

 Identify the facts  Identify the problems  Select the major problems in the case  Suggest solutions to these major problems  Recommend the best solution to be implemented  Detail how this solution should be implemented

NB: The case is the "real life" situation; the case study is the analysis of this situation

How to write the case study

There are usually eight sections in a case study.

Synopsis/Executive summary

 Outline the purpose of the case study  Outline the issues and findings of the case study without the specific details  Here, the reader should be able to get a clear picture of the essential contents of

the study.  Note any assumptions made (you may not have all the information you'd like so

some assumptions may be necessary eg: "It has been assumed that…", "Assuming that it takes half an hour to read one document…")

Comment [S1]: This is the type for our class

Comment [S2]: OUTLINE FOR CASE ANALYSIS Title Page (APA formatted) Case Name: I. Major Facts (State here the major facts as you see them. Make statements clear and concise for your own understanding as well as for the understanding of the other students and the instructor.) II. Major Problem (State here the major problem as you see it. Emphasize the present major problem. You may wish to phrase your statement in the form of a question. In a few cases, there may be more than one major problem. A good problem statement will be concise, usually only one sentence.) III. Possible Solutions A. (List here the possible solutions to the major problem. Let your imagination come up with alternative ways to solve the problem. B. Do not limit yourself to only one or two possible solutions. These solutions should be distinct from each other. C. However, you may wish to include portions of one solution in another solution, as long as each solution stands alone. Only in this manner will your subsequent choice be definitive. D. Briefly note advantages and disadvantages of each possible solution.) etc. IV. Choice and Rationale (State here your choice, A or B or ___ and the detailed reasons for your choice. You may also state your reasons for not choosing the other alternative solutions.) V.Implementation (Prepare a plan to implement your choice) Appendix (Answer case study questions) Reference Page (APA formatted)

Findings

 Identify the facts/problems found in the case. Each analysis of a problem should be supported by facts given in the case together with the relevant course concepts. Here, it is important to search for the underlying problems for example: cross-cultural conflict may be only a symptom of the underlying problem of inadequate policies and practices within the company.

 This section is often divided into sub-sections, one for each problem.

Discussion

 Summarize the major problem/s  Identify alternative solutions to this/these major problem/s (there is likely to be

more than one solution per problem)  Briefly outline each alternative solution and then evaluate it in terms of its

advantages and disadvantages  No need to refer to theory or coursework here.

Conclusion

 Sum up the main points from the findings and discussion

Recommendations

 Choose which of the alternative solutions should be adopted  Briefly justify your choice explaining how it will solve the major problem/s  This should be written in a forceful style as this section is intended to be

persuasive  Here integration of coursework is appropriate

Implementation

 Explain what should be done, by whom and by when  If appropriate include a rough estimate of costs (both financial and time).

References

 Make sure all references are sited correctly

Appendices (if any)

 Note any original data that relates to the study but which would have interrupted the flow of the main body.

Comment [S3]: Case Study questions