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Operations Management Individual Case Assignment

OperationsManagement Individual Case Assignment

OperationsManagement Individual Case Assignment

Overview

PrimaryProblem

Theprimary problem at the Parts Emporium is poor inventory management.When Sue McCaskey joined the organization as a materials manager, shefinds out that she has a challenging task. Parts Emporium, which wasestablished in 1973, had not lived up to its expectations. Its growthhas been dwindling over the years. Therefore, the main challenge thatSue has to deal with is streamlining the management of the inventorysystem. From her observations, she realized that there are lots ofinefficiencies in the management of the company’s inventory system.A thorough analysis of the DB032 drive belt and EG151 exhaust gasketprove that the situation is not good. Hence, as a new manager, Sueshould come up with strategies to rectify the situation and put thecompany on the right path of accomplishing its short and long termgoals.

SituationalAnalysis

Sinceits establishment in 1973, Parts Emporium Inc. has grown to be alarge company. But, this does not mean that it does not havechallenges. Over the years, the company had to take up necessarymeasures to improve its performance. However, satisfactoryperformance has not been experienced because of the myriad ofobstacles the company experiences every day. As noted by Sue, thecompany has many weaknesses. The current major challenge facing thecompany is poor inventory management. From the case study conductedon DB032 drive belt and EG151, it is clear that the company might notachieve its goals because of the poor manner in which it manages itsstock.

Asan organization, Parts Emporium has not adopted effective customermanagement strategies. So far, the company does not satisfy the needsof all its clients. From the random selection done by Sue, it wasobserved that many clients have been complaining because of poorservice delivery. The poor management of the company’s stock wasobserved when the records from the inventory indicated that up to 10%of the clients’ demands are lost to the competitors. This means thecompany is inefficient in appealing to the customers. If the companywere effective, it would have enjoyed a large share of the marketthan any of its rivals. This is a very serious weakness that shouldbe addressed with immediate effect (Mehra&amp Inman, 2014).Many customers run away from the company because the management doesnot treat the backorder as a matter of urgency that does not need anyform of delay.

Theother weakness of the company is that its poor inventory managementhas resulted in a reduction of profitability. The company’s profitmargin has narrowed because of the increase in the costs ofproduction. When it comes to stock investments, the company spends upto 21% of its costs holding its inventory. On the other hand, thecompany does not charge its clients for the delivery servicesrendered to them. The company thus loses a lot of resources thatwould otherwise be plowed back into the business. Last, but notleast, the company loses a large number of its clients because itdoes not provide sales discounts. The fact that the clients who buyEG151 exhaust gasket and DB032 are not entitled to any discount isquite discouraging. These reasons show that the company isinefficient in handling its inventory system. However, thisnotwithstanding, the company still has enough opportunities forimproving its management system and emerge as the best alternativespare part dealer in the market.

Recommendations

EmporiumParts Inc. is in a real crisis. The company needs to be salvagedbecause if the situation persists, it might run out of business. Themanagement should take necessary business measures for example,proper staff and inventory management. The paper recommends that themanagement of the company should hire and offer the necessary supportto a materials manager. Once Sue assumes office, she should be giventhe opportunity to make all the necessary changes that can help inimproving the management of inventory. If this is done, the materialsmanager will feel motivated and energized to reorganize the company’sinventory system and ensure that it is functional. For example, therate of delivery should be improved because any delays mightinconvenience the clients.

Anotherrecommendation is that the company should improve its customermanagement strategies. Just like the employees and investors, thecustomers should be treated as a significant part of the company. Toappeal to them, they deserve to be treated well. Apart frombenefiting from the improved inventory management, the clients shouldbe charged fair prices when they purchase the company’s supplies(Mehra &amp Inman, 2014).At the same time, the clients should be entitled to quantitydiscounts when they purchase the commodities. The recommended pricefor EG151 exhaust gasket and DB032 should, therefore, be $12 and $8respectively. However, the delivery costs should be increased tocater for the additional transportation expenses. When this is done,all the challenges related to customer satisfaction will beeradicated thus enabling the company to achieve at least 95% of itscycle-service level targeted by the new manager.

Reference

Mehra,S., &amp Inman, R. (2014). “Inventory management and efficiency ofmanufacturing firms.”

Journalof Operations Management,1(2),1-4.