Call-Us Plumbing: Capacity Planning and Supply Chain Management
VerifiedAdded on 2023/04/21
|20
|5289
|317
Report
AI Summary
This report provides an analysis of operational management within Call-Us Plumbing Supply Company, focusing on capacity and production planning, inventory and stock management, and supply chain management. It begins by discussing capacity planning strategies such as lead and lag strategies and proposes solutions for meeting increased market demand, including introducing a new production line or outsourcing. The report recommends outsourcing as a temporary solution, emphasizing the importance of quality assurance. Furthermore, it explores inventory management systems, suggesting automation and inventory management software. The report highlights integrated planning and execution as an effective inventory management tool and addresses the significance of supplier relationships and lead time. Finally, the report investigates supply chain management, focusing on supplier selection, performance measurement, and risk management, and includes a diagram illustrating the supply chain for Call-Us Plumbing Supply Limited.

Operational Management
1
1
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser

Contents
Introduction................................................................................................................................3
Capacity and production planning.............................................................................................4
Q1.1-1.2 Access and manage resources to improve entity performance...............................4
Q1.3-1.4 Access and manage resources to improve entity performance...............................5
Inventory and Stock...................................................................................................................8
Q2.1- 2.2 Access and manage resources to improve entity performance..............................8
Q2.3- 2.4 Access and manage resources to improve entity performance..............................9
Investigation- Supply chain management................................................................................12
Q3.1 Access and manage resources to improve entity performance....................................12
Q3.2 Access and manage resources to improve entity performance....................................13
Q3.3 Research, evaluate, and communicate information for entity performance................16
Conclusion................................................................................................................................17
References................................................................................................................................18
2
Introduction................................................................................................................................3
Capacity and production planning.............................................................................................4
Q1.1-1.2 Access and manage resources to improve entity performance...............................4
Q1.3-1.4 Access and manage resources to improve entity performance...............................5
Inventory and Stock...................................................................................................................8
Q2.1- 2.2 Access and manage resources to improve entity performance..............................8
Q2.3- 2.4 Access and manage resources to improve entity performance..............................9
Investigation- Supply chain management................................................................................12
Q3.1 Access and manage resources to improve entity performance....................................12
Q3.2 Access and manage resources to improve entity performance....................................13
Q3.3 Research, evaluate, and communicate information for entity performance................16
Conclusion................................................................................................................................17
References................................................................................................................................18
2

Introduction
Operation management can be defined as the management of all the activities that are related
to the production and storage of goods and services in a business organization. This type of
Management is very essential for a business organization that is operating in the
manufacturing industry. It is important for these organizations to increase efficiency and
effectiveness of business activities so that overall profitability can be increased. This report
will be focused on operational management in Call-Us plumbing Supply Company. The
primary business of this organization is to produce and distribute plumbing items to other
business organizations operating in Australia. A case study is provided in relation to this
organization on the basis of which this report is prepared. This report will discuss the
capacity planning and management activities that can be undertaken by the management of
this organization in order to meet the excess demand in the market (Colledani et.al, 2014).
This report will also discuss another important aspect of operation management i.e. inventory
management and supply chain management. It is expected that this report will be helpful in
making sure that efficiency and effectiveness in a manufacturing organization can be
maintained with the help of capacity planning, supply chain management, and inventory
management.
3
Operation management can be defined as the management of all the activities that are related
to the production and storage of goods and services in a business organization. This type of
Management is very essential for a business organization that is operating in the
manufacturing industry. It is important for these organizations to increase efficiency and
effectiveness of business activities so that overall profitability can be increased. This report
will be focused on operational management in Call-Us plumbing Supply Company. The
primary business of this organization is to produce and distribute plumbing items to other
business organizations operating in Australia. A case study is provided in relation to this
organization on the basis of which this report is prepared. This report will discuss the
capacity planning and management activities that can be undertaken by the management of
this organization in order to meet the excess demand in the market (Colledani et.al, 2014).
This report will also discuss another important aspect of operation management i.e. inventory
management and supply chain management. It is expected that this report will be helpful in
making sure that efficiency and effectiveness in a manufacturing organization can be
maintained with the help of capacity planning, supply chain management, and inventory
management.
3
⊘ This is a preview!⊘
Do you want full access?
Subscribe today to unlock all pages.

Trusted by 1+ million students worldwide

Capacity and production planning
Capacity planning is the planning that helps in making sure that enough resources are
available with the organization for meeting the demand in the market. Capacity planning is
generally referred to as the production capacity of the company. It is important for a business
organization to make sure that all the demand presented by the market is fulfilled by them so
that effective and efficient market share can be maintained. The primary objective of capacity
and production planning is to make sure that the maximum profitability in the organization
can be maintained by production according to the demand in the market.
There are various factors that are considered by the business organization during capacity in
production planning. One of the most important factors is demand in the market as business
organizations compare the demand for their product and services to the supply made by them
in the market. If overall demand is lower as compared to supply then it is essential to increase
the capacity of the production plant. Availability of resources is another important factor as
there are various resources that are required for fulfilling a particular order from the client
(Krenczyk & Skołud, 2014). Management of the company should increase or decrease
available resources such as raw material, human resources, transportation resources,
distribution network etc. according to the capacity planning.
Q1.1-1.2 Access and manage resources to improve entity performance
1.1 Describe two capacity planning strategies
Lead strategy- in this type of strategic capacity planning is done by the organization in
advance. It means that the production capacity of the company is increased by the
organization on a regular interval of time irrespective the demand for product and services in
the market. For example of business, the organization will install machinery that can produce
1000 units of product whereas demand in the current business scenario is only 350 units.
Lag strategy- in this type of strategy it is the general practice of business organization to
operate at its full capacity level (Mukhopadhyay, 2015). Capacity level of an organization is
only increased when there is an actual increase in demand for the product.
1.2 Design two capacity planning strategies for improving the operational performance
of the organization
4
Capacity planning is the planning that helps in making sure that enough resources are
available with the organization for meeting the demand in the market. Capacity planning is
generally referred to as the production capacity of the company. It is important for a business
organization to make sure that all the demand presented by the market is fulfilled by them so
that effective and efficient market share can be maintained. The primary objective of capacity
and production planning is to make sure that the maximum profitability in the organization
can be maintained by production according to the demand in the market.
There are various factors that are considered by the business organization during capacity in
production planning. One of the most important factors is demand in the market as business
organizations compare the demand for their product and services to the supply made by them
in the market. If overall demand is lower as compared to supply then it is essential to increase
the capacity of the production plant. Availability of resources is another important factor as
there are various resources that are required for fulfilling a particular order from the client
(Krenczyk & Skołud, 2014). Management of the company should increase or decrease
available resources such as raw material, human resources, transportation resources,
distribution network etc. according to the capacity planning.
Q1.1-1.2 Access and manage resources to improve entity performance
1.1 Describe two capacity planning strategies
Lead strategy- in this type of strategic capacity planning is done by the organization in
advance. It means that the production capacity of the company is increased by the
organization on a regular interval of time irrespective the demand for product and services in
the market. For example of business, the organization will install machinery that can produce
1000 units of product whereas demand in the current business scenario is only 350 units.
Lag strategy- in this type of strategy it is the general practice of business organization to
operate at its full capacity level (Mukhopadhyay, 2015). Capacity level of an organization is
only increased when there is an actual increase in demand for the product.
1.2 Design two capacity planning strategies for improving the operational performance
of the organization
4
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser

it is provided in the given scenario that total demand is expected to increase by 150k
individual items in every month where is current production capacity of the company is 150k.
Therefore there is a requirement of increasing the production capacity of the company by
150K in order to take advantage of the opportunity presented by the market. Following are
the two strategies that can be very helpful in the given scenario-
Introduction of a production line
First of all the management of the company can introduce the new production line in the
organization. This will help in increasing the internal capacity which will be very helpful
from long term perspective for the company. The overall initial cost of investment in this type
of option is very high but overall benefits that will be achieved in future will compensate for
the overall cost of implementation. It is recommended that the management of the company
should use lead strategy in the given scenario if this option is opted for by the management.
The recommended management of the company should increase the internal capacity of the
company by 350K units. Therefore the overall capacity of the company if this option is taken
will be 500K units per month. With the help of this strategic management of the company
could not be required to increase the production capacity in the nearby future (Duffie,
Chehade & Athavale, 2014).
Outsourcing of excess production
Management of the company and also outsource the production of increased demand in a
country where cheap labor is available. This type of option will be beneficial for the
organization in the current business scenario as the company is facing a different type of
problems in relation to labor management (Hees & Reinhart, 2015). The overall cost of labor
is increasing significantly whereas profitability is not increasing with the same rate.
Q1.3-1.4 Access and manage resources to improve entity performance
1.3 Implement one capacity planning strategy with an applicable policy to the case
study
Two options are available with the organization for meeting the increased in market i.e.
introducing a new production line or outsourcing. There are various problems that are
currently faced by management in relation to the current production process. After
considering all these problems it is recommended that outsourcing option is the most
5
individual items in every month where is current production capacity of the company is 150k.
Therefore there is a requirement of increasing the production capacity of the company by
150K in order to take advantage of the opportunity presented by the market. Following are
the two strategies that can be very helpful in the given scenario-
Introduction of a production line
First of all the management of the company can introduce the new production line in the
organization. This will help in increasing the internal capacity which will be very helpful
from long term perspective for the company. The overall initial cost of investment in this type
of option is very high but overall benefits that will be achieved in future will compensate for
the overall cost of implementation. It is recommended that the management of the company
should use lead strategy in the given scenario if this option is opted for by the management.
The recommended management of the company should increase the internal capacity of the
company by 350K units. Therefore the overall capacity of the company if this option is taken
will be 500K units per month. With the help of this strategic management of the company
could not be required to increase the production capacity in the nearby future (Duffie,
Chehade & Athavale, 2014).
Outsourcing of excess production
Management of the company and also outsource the production of increased demand in a
country where cheap labor is available. This type of option will be beneficial for the
organization in the current business scenario as the company is facing a different type of
problems in relation to labor management (Hees & Reinhart, 2015). The overall cost of labor
is increasing significantly whereas profitability is not increasing with the same rate.
Q1.3-1.4 Access and manage resources to improve entity performance
1.3 Implement one capacity planning strategy with an applicable policy to the case
study
Two options are available with the organization for meeting the increased in market i.e.
introducing a new production line or outsourcing. There are various problems that are
currently faced by management in relation to the current production process. After
considering all these problems it is recommended that outsourcing option is the most
5

appropriate option until these problems are properly analyzed and solved by the management
(Akhtar, 2016).
It is recommended that the management of the company should identify some of the countries
in which labor are available at lower cost and transportation cost is also low. With the help of
a test strategy management of the company would be able to increase the overall profitability
of the company which is not happening in the current business scenario. One of the most
important factors that should be considered by management during Outsourcing is quality
assurance (Skolud, Krenczyk & Zemczak, 2015). Independent department should be
established by the organization which will be responsible for checking whether the product
manufactured by outsourcing organization is according to standards of Call-Us Plumbing
Supply Limited.
This solution is a temporary solution after considering the current operational position of
Call-Us Plumbing Supply Limited. From a long term perspective, it is recommended that the
management of the company should focus on installing a new production line. Outsourcing
strategy should be used only for a limited period of time during which management should
analyze the root cause of the operational problems.
Policy
Goal- goal of this strategy is to make sure that the company is able to increase their
production capacity in order to meet the increased demand in market.
Tasks and procedures to perform
Identifying different organizations that has addition capacity to produce the additional
demand in market.
Selection of an organization on the basis of their price and quality.
Establishing a new quality assurance department.
Possible issues
Lack of quality in finished goods
Outsourcing organization not able to follow instructions of Call-Us Plumbing
Limited.
Order is not completed in time.
6
(Akhtar, 2016).
It is recommended that the management of the company should identify some of the countries
in which labor are available at lower cost and transportation cost is also low. With the help of
a test strategy management of the company would be able to increase the overall profitability
of the company which is not happening in the current business scenario. One of the most
important factors that should be considered by management during Outsourcing is quality
assurance (Skolud, Krenczyk & Zemczak, 2015). Independent department should be
established by the organization which will be responsible for checking whether the product
manufactured by outsourcing organization is according to standards of Call-Us Plumbing
Supply Limited.
This solution is a temporary solution after considering the current operational position of
Call-Us Plumbing Supply Limited. From a long term perspective, it is recommended that the
management of the company should focus on installing a new production line. Outsourcing
strategy should be used only for a limited period of time during which management should
analyze the root cause of the operational problems.
Policy
Goal- goal of this strategy is to make sure that the company is able to increase their
production capacity in order to meet the increased demand in market.
Tasks and procedures to perform
Identifying different organizations that has addition capacity to produce the additional
demand in market.
Selection of an organization on the basis of their price and quality.
Establishing a new quality assurance department.
Possible issues
Lack of quality in finished goods
Outsourcing organization not able to follow instructions of Call-Us Plumbing
Limited.
Order is not completed in time.
6
⊘ This is a preview!⊘
Do you want full access?
Subscribe today to unlock all pages.

Trusted by 1+ million students worldwide

Termination of strategy
According to the terms and condition of the contract, this contract will be terminated if more
than 15% of the finished goods are not able to pass the quality assurance test.
1.4 Provide one diagram of an ideal capacity planning framework
Following is a diagram that will be helpful in understanding the overall framework that will
be used in the outsourcing strategy-
Following are some of the factors that should be considered by Call-Us plumbing taking any
kind of decision in outsourcing of production process-
Cost-benefit analysis- cost benefit analysis will be done by Call-Us plumbing to make
sure that outsourcing option is financially viable.
Pricing- total cost in outsourcing option should not exceed normal cost price of
products.
The technology used by outsourcing organization- Technology used by such
organiation should not be outdated as compared to Call-Us plumbing.
Timely completion of orders- time clause should be added in terms and condition of
the contract.
Supervision required- standards should be set by quality assurance department to
make sure that finished goods transferred are of decided standards (Ross, 2015).
Communication with the outsourcing organization- weekly meeting should be held
through video conferencing.
7
According to the terms and condition of the contract, this contract will be terminated if more
than 15% of the finished goods are not able to pass the quality assurance test.
1.4 Provide one diagram of an ideal capacity planning framework
Following is a diagram that will be helpful in understanding the overall framework that will
be used in the outsourcing strategy-
Following are some of the factors that should be considered by Call-Us plumbing taking any
kind of decision in outsourcing of production process-
Cost-benefit analysis- cost benefit analysis will be done by Call-Us plumbing to make
sure that outsourcing option is financially viable.
Pricing- total cost in outsourcing option should not exceed normal cost price of
products.
The technology used by outsourcing organization- Technology used by such
organiation should not be outdated as compared to Call-Us plumbing.
Timely completion of orders- time clause should be added in terms and condition of
the contract.
Supervision required- standards should be set by quality assurance department to
make sure that finished goods transferred are of decided standards (Ross, 2015).
Communication with the outsourcing organization- weekly meeting should be held
through video conferencing.
7
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser

Inventory and Stock
Inventory management can be defined as the management of inventory and stock available
with the organization. It helps in overseeing the ordering, storage and controlling of inventory
in the organization. This function is also responsible for overseeing all the functions in
relation to the cost associated with inventory. The type of management is very essential for a
business organization operating in the manufacturing industry as it is not essential that each
and every product manufactured by such organization are sold in the market immediately. In
addition to that, it also helps in the flow of products in the market according to demand and
supply (Muller, 2019).
One of the most important factors that can affect inventory management is the relationship
with suppliers. In a competitive market, it is very essential management to maintain an
effective and efficient relationship with its supplier of raw material as the power of
bargaining in competitive market lies with suppliers. This effective and efficient relationship
will help in acquiring raw material at reasonable prices which might be lower as compared to
competitors. Lead time is also an essential factor that can affect the efficiency of the
inventory management system (Patil & Divekar, 2014). It refers to the time between ordering
and receiving raw material from a supplier.
Q2.1- 2.2 Access and manage resources to improve entity performance
2.1 Describe two inventory and stock management system
An inventory management system that can be beneficial for Call-Us Plumbing Supply
Limited are as follows-
Automation- Call- Us plumbing supply limited should be shifted from manual inventory
management system to an automated inventory management system. This type of
management system will help in reducing the overall risk of errors and omissions in
recording and controlling inventory.
Software- Instead of installing a detailed information system management of the company
can also inventory management software. The software can be implemented at lower cost and
their efficiency is maintained in a small business organization such as Call-Us Plumbing
Supply Limited (Coelho & Laporte, 2014).
8
Inventory management can be defined as the management of inventory and stock available
with the organization. It helps in overseeing the ordering, storage and controlling of inventory
in the organization. This function is also responsible for overseeing all the functions in
relation to the cost associated with inventory. The type of management is very essential for a
business organization operating in the manufacturing industry as it is not essential that each
and every product manufactured by such organization are sold in the market immediately. In
addition to that, it also helps in the flow of products in the market according to demand and
supply (Muller, 2019).
One of the most important factors that can affect inventory management is the relationship
with suppliers. In a competitive market, it is very essential management to maintain an
effective and efficient relationship with its supplier of raw material as the power of
bargaining in competitive market lies with suppliers. This effective and efficient relationship
will help in acquiring raw material at reasonable prices which might be lower as compared to
competitors. Lead time is also an essential factor that can affect the efficiency of the
inventory management system (Patil & Divekar, 2014). It refers to the time between ordering
and receiving raw material from a supplier.
Q2.1- 2.2 Access and manage resources to improve entity performance
2.1 Describe two inventory and stock management system
An inventory management system that can be beneficial for Call-Us Plumbing Supply
Limited are as follows-
Automation- Call- Us plumbing supply limited should be shifted from manual inventory
management system to an automated inventory management system. This type of
management system will help in reducing the overall risk of errors and omissions in
recording and controlling inventory.
Software- Instead of installing a detailed information system management of the company
can also inventory management software. The software can be implemented at lower cost and
their efficiency is maintained in a small business organization such as Call-Us Plumbing
Supply Limited (Coelho & Laporte, 2014).
8

Both of these strategies would be very effective in the current business scenario as the
majority of business organizations are using advanced technology to meet their goals and
objectives in relation to inventory management.
2.2 Design an inventory management tool using widely accepted approaches
Integrated planning and execution is one of the most efficient inventory management tools
that is currently being used by business organizations. The basic principle behind integration
planning and execution is to make sure that all the business processes in the organization are
connected with the inventory management system. This will help in the effective and efficient
flow of information in the organization that will be helpful for inventory management. All the
data in relation to inventory management that is recorded by some other department such as
purchase department can be acquired easily (Mountz et.al, 2015). For successful
implementation of integrated planning and execution, Enterprise Resource Planning (ERP)
system should be used by the organization.
Following are some of the characteristic of ERP system that will be helpful in mitigating the
problems currently faced by the inventory management system of Call-Us plumbing supply
Limited.
Currently, the overall cost of inventory is increasing in the organization due to excessive
inventory in work in progress. It clearly shows that estimations made in relation to the time
required for the production of a unit are not accurate. Past information can be gathered with
the help of ERP systems and a report can be prepared for calculating average time required
for the production of 1 unit.
It is also given that that efficiency of production equipment is decreasing. With the help of a
report prepared from ERP systems, the primary reason behind decreasing efficiency of the
production equipment can be identified (Disney, Maltz, Wang & Warburton, 2016). If there
are some problems with this equipment then search equipment should be replaced.
Q2.3- 2.4 Access and manage resources to improve entity performance
2.3 Provide a diagram illustration or model of an inventory management system or
framework
9
majority of business organizations are using advanced technology to meet their goals and
objectives in relation to inventory management.
2.2 Design an inventory management tool using widely accepted approaches
Integrated planning and execution is one of the most efficient inventory management tools
that is currently being used by business organizations. The basic principle behind integration
planning and execution is to make sure that all the business processes in the organization are
connected with the inventory management system. This will help in the effective and efficient
flow of information in the organization that will be helpful for inventory management. All the
data in relation to inventory management that is recorded by some other department such as
purchase department can be acquired easily (Mountz et.al, 2015). For successful
implementation of integrated planning and execution, Enterprise Resource Planning (ERP)
system should be used by the organization.
Following are some of the characteristic of ERP system that will be helpful in mitigating the
problems currently faced by the inventory management system of Call-Us plumbing supply
Limited.
Currently, the overall cost of inventory is increasing in the organization due to excessive
inventory in work in progress. It clearly shows that estimations made in relation to the time
required for the production of a unit are not accurate. Past information can be gathered with
the help of ERP systems and a report can be prepared for calculating average time required
for the production of 1 unit.
It is also given that that efficiency of production equipment is decreasing. With the help of a
report prepared from ERP systems, the primary reason behind decreasing efficiency of the
production equipment can be identified (Disney, Maltz, Wang & Warburton, 2016). If there
are some problems with this equipment then search equipment should be replaced.
Q2.3- 2.4 Access and manage resources to improve entity performance
2.3 Provide a diagram illustration or model of an inventory management system or
framework
9
⊘ This is a preview!⊘
Do you want full access?
Subscribe today to unlock all pages.

Trusted by 1+ million students worldwide

Working of ERP system for facilitating inventory management in the organization can be
explained with the help of the following diagram-
From the above process flow, it can be said that all the business activities in the organization
are connected with the ERP system inventory. The flow of information in this type of
network will be very effective and any kind of information required for management of
inventor can be gathered with accuracy and relevance. Data analysis tools in the ERP system
will help in increasing the efficiency of all the activities undertaken by the inventory
management department (Huang & Handfield, 2015). ERP system will also help in
preparation of accurate financial and operational reports. The main objective of financial
reporting is to make sure that the true financial position of the company is represented in the
financial statements. In addition to that efficiency of operational management activities will
also increase as it is dependent on the accuracy and relevancy of information (Ptak &
Schragenheim, 2016). Informed decisions can be taken by the management of the company in
order to take strategic development steps.
With the help of ERP systems management of the company can estimate the demand for
product and services in the market and make quick orders in relation to raw material to
suppliers. All the activities in relation to stock management can be conducted by the
management of Call-Us Plumbing Supply Limited on a real-time basis.
2.4 Provide worked examples of the use of a typical inventory management tool for use
in relation to the case study
10
explained with the help of the following diagram-
From the above process flow, it can be said that all the business activities in the organization
are connected with the ERP system inventory. The flow of information in this type of
network will be very effective and any kind of information required for management of
inventor can be gathered with accuracy and relevance. Data analysis tools in the ERP system
will help in increasing the efficiency of all the activities undertaken by the inventory
management department (Huang & Handfield, 2015). ERP system will also help in
preparation of accurate financial and operational reports. The main objective of financial
reporting is to make sure that the true financial position of the company is represented in the
financial statements. In addition to that efficiency of operational management activities will
also increase as it is dependent on the accuracy and relevancy of information (Ptak &
Schragenheim, 2016). Informed decisions can be taken by the management of the company in
order to take strategic development steps.
With the help of ERP systems management of the company can estimate the demand for
product and services in the market and make quick orders in relation to raw material to
suppliers. All the activities in relation to stock management can be conducted by the
management of Call-Us Plumbing Supply Limited on a real-time basis.
2.4 Provide worked examples of the use of a typical inventory management tool for use
in relation to the case study
10
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser

Vendor managed inventory tool can you manage effectively used by management of the
company. Currently, the main problem that is faced by the organization is that management is
not able to accurately estimate the demand for product and services in the market. This is the
reason that there is a requirement of suddenly increasing the overall capacity of production to
300K per month. Vendor managed inventory tool helps in making estimations in relation to
market demand (Wild, 2017). The chances of stock out in case of this vendor managed
inventory tool is very negligible.
Example-
VMI tool can be used by management of Call-Us Plumbing limited in following manner-
VMI tool can be used by Call-Us Plumbing limited as a part of ERP system as there
are various software available that can integrate with the system of the company.
Following steps will be undertaken by the management to use VMI tool for inventory
management-
Data in relation to previous sales, demand, raw material ordered, timing of order etc.
will be entered as input be the organization in ERP system which is integrated with
VMI software.
ERP system will check the accuracy and relevance of the data entered.
Reorder point will be calculated by system with the help of input data. This reorder
point will specify the quantity and timing of raw material required by Call-Us
Plumbing Supply Limited.
It is expected that the problem in relation to excess WIP can be solved with the help
of this tool. In addition to that overall carrying cost and reorder cost can also be
minimised.
11
company. Currently, the main problem that is faced by the organization is that management is
not able to accurately estimate the demand for product and services in the market. This is the
reason that there is a requirement of suddenly increasing the overall capacity of production to
300K per month. Vendor managed inventory tool helps in making estimations in relation to
market demand (Wild, 2017). The chances of stock out in case of this vendor managed
inventory tool is very negligible.
Example-
VMI tool can be used by management of Call-Us Plumbing limited in following manner-
VMI tool can be used by Call-Us Plumbing limited as a part of ERP system as there
are various software available that can integrate with the system of the company.
Following steps will be undertaken by the management to use VMI tool for inventory
management-
Data in relation to previous sales, demand, raw material ordered, timing of order etc.
will be entered as input be the organization in ERP system which is integrated with
VMI software.
ERP system will check the accuracy and relevance of the data entered.
Reorder point will be calculated by system with the help of input data. This reorder
point will specify the quantity and timing of raw material required by Call-Us
Plumbing Supply Limited.
It is expected that the problem in relation to excess WIP can be solved with the help
of this tool. In addition to that overall carrying cost and reorder cost can also be
minimised.
11

Investigation- Supply chain management
Q3.1 Access and manage resources to improve entity performance
Supply chain management flow diagram
Above diagram clearly defines the steps that will be required for supply chain management in
a business organization that is operating in the FMCG industry. About diagram is explained
in details as follows-
Vendor and Sourcing- First of all request will be made to vendor supplier for supply of raw
material for the production process. Proper sources of transportation will be required that will
not affect the course structure of the company. Input in this scenario would be the request
made to the vendor and output would be the raw material supplied to the organization
(Christopher, 2016). It is very important to maintain an effective relationship with suppliers
as Call-us Plumbing Supply Limited is operating in a very competitive market.
Inbound storage and transportation- it is not practically possible for organization to use all the
raw material acquired from the supplier in the production process immediately. The raw
material is acquired from vendors in lots and not in accordance with the production process.
This is due to the fact that the acquisition of raw material in lots is cheaper. Therefore
management of the company will be required to store the access raw material in inbound
12
Q3.1 Access and manage resources to improve entity performance
Supply chain management flow diagram
Above diagram clearly defines the steps that will be required for supply chain management in
a business organization that is operating in the FMCG industry. About diagram is explained
in details as follows-
Vendor and Sourcing- First of all request will be made to vendor supplier for supply of raw
material for the production process. Proper sources of transportation will be required that will
not affect the course structure of the company. Input in this scenario would be the request
made to the vendor and output would be the raw material supplied to the organization
(Christopher, 2016). It is very important to maintain an effective relationship with suppliers
as Call-us Plumbing Supply Limited is operating in a very competitive market.
Inbound storage and transportation- it is not practically possible for organization to use all the
raw material acquired from the supplier in the production process immediately. The raw
material is acquired from vendors in lots and not in accordance with the production process.
This is due to the fact that the acquisition of raw material in lots is cheaper. Therefore
management of the company will be required to store the access raw material in inbound
12
⊘ This is a preview!⊘
Do you want full access?
Subscribe today to unlock all pages.

Trusted by 1+ million students worldwide
1 out of 20
Related Documents

Your All-in-One AI-Powered Toolkit for Academic Success.
+13062052269
info@desklib.com
Available 24*7 on WhatsApp / Email
Unlock your academic potential
Copyright © 2020–2025 A2Z Services. All Rights Reserved. Developed and managed by ZUCOL.