Paper on Supply Chain Management and Logistics
15 Pages3500 Words123 Views
Added on 2020-04-29
Paper on Supply Chain Management and Logistics
Added on 2020-04-29
ShareRelated Documents
Logistics and Supply Chain Management 1Logistics and Supply Chain ManagementAuthor Institution
Logistics and Supply Chain Management 2Abstract This paper answers three questions on logistics and supply chain management. The paper emphasizes the importance of inventory to Wheeled Coach Company. In addition, it addresses the issue of excess inventory, its disadvantages and possible ways of minimizing inventory. The paper also explains the meaning and role of Enterprise Resource Planning (ERP) as an extension of the Material Requirements Planning system. Finally, the paper goes further to illustrate the various differences between manufacturing and service industry supply chain.
Logistics and Supply Chain Management 3Question 1Inventory Importance of Inventory Inventory is an essential component to every business’ balance sheet. In addition, it plays a major role in the daily operations of a business. A Manufacturing Company, like Wheeled Coach, keeps an inventory of raw materials used in the manufacturing of ambulances. Additionally, the company must also keep an inventory of the assembled ambulances. A company is bound to fail where the practice of inventory keeping has not been adopted.Inventory influences revenue and profits of an organization directly. The coach must keep an inventory of the raw materials used in the assembly of the ambulances. The data obtained is then compared with the output to determine revenue and the profits made by the company at a particular point in time. In business terms, profit is the sum of the total income and the subtractive variable costs. This implies that the ability of a company to generate profits is based on their ability to acquire inventory at the lowest price possible and sell the products at the highest possible price (“Why Is Inventory Important,” n.d.). Inventory keeping also helps in the management of the entire production process. On the same note, it is important to manage inventory in a cost-effective manner in order to maximize profits. For instance, too much inventory may be disadvantageous because employees will be paid more to organize the same. Inventory turnover is also essential to every company (“Why Is Inventory Important,” n.d.). For example, Wheeled Coach uses the inventory data to calculate theinventory turnover ratio. This ratio dictates the performance of the company through a certain period of time compared to other companies or the company itself.
Logistics and Supply Chain Management 4Excess Inventory at Wheeled CoachThe Company uses IBM MAPICS MRP to generate reports concerning its inventory. This system was purchased by the company to help in improving the accuracy of inventory in thecompany. However, the Company is faced with inventory issues like excess inventory. The company has excess inventory as reported by the MRP. Excess inventory is described as any supply that exceeds the demand of the products. The company has excess inventory due to the previous methods of inventory data collection and management. The method was inaccurate and this leads to the company buying more raw materials thatare required in the assembly of ambulances. This hypothesis is proven when the MRP is able to identify the excess inventory. In addition, the previous reports were inaccurate that many inventor items were not called out in the bills-of-material report. Wheeled Coach did not accurately monitor the inventory items. They were oblivious to the fact that demand for products has stages (Daniel, 2017). Additionally, the excess inventory was as a result of a decline in the life cycle of the product. With the decline in demand of the ambulances, the company failed to monitor the demand stages. This made the company run at risk of getting stuck with excess inventory (Daniel, 2017). According to iEntry Network (2010), excess inventory reduces the responsiveness of the company because the minimum time required to pull inventory is increased. Reducing Excess Inventory The plant manager, Lynn Whalen, ought to address the excess inventory issue. The company should focus all efforts to this sector in accordance with the MRP inventory report
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Essay on Inventory Managementlg...
|15
|3121
|223
Logistics and Supply Chain Managementlg...
|16
|3283
|360
Supply Chain Management for Vector Valves Ltdlg...
|30
|4152
|248
Supply Chain Management: Importance, Benefits, Processes and Elementslg...
|7
|1611
|424
Logistics and Management: Supply Chain Strategies and Future Sustainability of Delllg...
|16
|4104
|273
Logistics and Supply Chain Management of Airbuslg...
|4
|716
|20