System Thinking: Importance and Recommendations for Pump Ltd

Running Head: SYSTEM THINKING 1
System thinking
Name
Institution

SYSTEM THINKING 2
System thinking
Part A: Proposal
Introduction
According to Diana (2017), many organizations are nowadays faced with inventory
management problem whereby they find it hard in knowing how much to order at a particular
time to meet the demand of their products. Poor inventory management can lead to business
failure. For example, pump ltd, a company in Australia, dealing with supply of different water
pumps had problems in the inventory management. Due to this error, they predicted more than
what was demanded and were able to loose million dollars on their sales in that particular year.
The system had errors such that it made unnecessary stocks and not able to determine which
products are moving faster than the other.
Unintended consequence on various stakeholders
According to Monk & Howard (1998), problems faced by organizations should be
addressed because however small they may appear they can have a significant impact on its
operations. The problem facing pump limited can have not only a consequence to the company
but also to its stakeholders. For instance, running out of stock when the demand is high can make
the customers to look for same products from alternative companies because according to Tian &
Lu, (2015), consumers like being associated with organizations which give them full satisfaction.
The problem can also affect its shareholders in the fact that lacking proper means of stock
management can have a significant impact on sales revenue, which can, in turn, affect the return
on investment for the shareholders.

SYSTEM THINKING 3
System thinking also helps in avoiding mankind unintended consequences (Wang, 2013).
This because in many companies, managers have a desire of increasing their sales and this may
make them fire employees who are making the least sales. The new employees might generate
more sales but he or she may lack or organizational and relational skills. After applying system
thinking in this case and try to judge past sale and look at the behaviours of the whole sales team,
managers may find out that the sacked employee played a very important role. Therefore,
Managers should think ways of improving work efficiency other than looking at the characters of
an individual. According to Diana (2017), system thinking is very important in solving
organizational problems.
Recommendations
According to Kast & Rosenzweig (1986), businesses should identify problems affecting
their operations before they become a major concern. Having system thinking is crucial because
using various tools such as rich pictures to explore, acknowledge and define the key issue that
makes the company to lack proper stock control measures. Using other tools such as conceptual
model, decision matrix, functional modelling, function means analysis, context diagram, affinity
diagram can also assist managers at pump limited to focus on the major things that are happening
in the company which may cause business failure (Marcela, 2013). This may include things like
what makes the company to have understock, who should be responsible for ordering new stock
when the stock should be ordered and so forth
Pump ltd should implement system thinking in its operations so that it can understand
how factors influence each other. For instance, using this approach can assist the management to
understand how lack of proper inventory can affect its stakeholders and the performance of the
company (Wang, 2013). System thinking also saves time and costs associated with certain