Operations Management Report: Capacity, Inventory, Supply Chain

This report delves into the core concepts of operations management, focusing on capacity planning, inventory management, and supply chain strategies. It begins by examining two capacity planning strategies: lead and lag, and explores their application in a case study involving Call US Plumbing. The report then discusses inventory and stock management, outlining various strategies and tools such as mobile inventory management and data analytics. A model for an ideal inventory management system is presented, alongside a practical example. Finally, the report investigates supply chain management, appraising the applicability of an FMCG Value Creation Model for Countdown, and suggesting strategies to improve its performance and operations, including a supply chain flow diagram. The report aims to provide practical insights and recommendations for optimizing operational efficiency and performance.

Name- Paraskumar Jain
OPERATIONS MANAGEMENT
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Contents
Introduction......................................................................................................................................3
1. Capacity and Production Planning...............................................................................................4
1.1 Two Strategy for Capacity Planning......................................................................................4
1.2 Designing two capacity planning strategy for increasing operational performance..............4
1.3 Implement one capacity planning strategy.............................................................................5
1.4 Diagram of the model for the capacity planning strategy......................................................6
2. Inventory and Stock.....................................................................................................................9
2.1Two Inventory and stock management strategies...................................................................9
2.2 Inventory management tools using widely accepted approaches........................................10
2.3 Model of an ideal inventory management system or framework.........................................12
2.4 Provide a worked example of the uses of a typical inventory management tool in the
context of the case study............................................................................................................12
3. Investigation- Supply Chain Management................................................................................15
3.1 Appraising the applicability of chosen FMCG Value Creation Model...............................15
3.2 Supply Chain Management flow diagram...........................................................................18
3.3 Supply Chain strategy improving performance and operations...........................................19
Conclusion.....................................................................................................................................21
References......................................................................................................................................22
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Introduction
This report highlights several kinds of skilled panning procedure such as lead and lags strategy.
Profit and the feature of such planning are discussed in the report. Further, the report encloses the
design of the strategy for capacity planning that could be applied in a company i.e. Call US
plumbing. Further, the steps which can be incorporated into the company for demolishing the
issues such as excessive demands of goods and a number of return products, delay in production
are discussed in this report. This report entails the strategies for management if inventory.
Additionally, an FMCG company Countdown is chosen for this report in context to make the
discussion about supply chain management. A model of supply chain and value creation is
suggested for Countdown that could facilitate in enhancing the performance and operations of
the firm. Besides this, strategies are also recommended for Countdown to make further
improvement in its supply chain.
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1. Capacity and Production Planning
1.1 Two Strategy for Capacity Planning
In accordance with the case, it can be stated that there is a major difference in the production
volume and the level of demand. It is essential to focus on strategies for effective capacity
planning. The strategies for capacity planning are discussed below:
Lead Strategy
A lead strategy can be employed by Call US Plumbing Supply Company Limited for planning its
capacity (Darwish & Odah, 2010). This strategy will embrace in increasing the capacity of
company which prompts to either enticing extra customers or take away the existing customers
from the competition by encompassing the capacity to respond to the needs of customers without
any delay, where the competitor`s current capacity is not capable to achieve so(Altendorfer,
2014).
Lag Strategy
Lag capacity strategy stipulates assimilating capacity only when the organization functioning at
100% because of upliftment in demand. It is really a conservative strategy also another name of
Lag strategy. It highlights upon the risk of the waste but it may escort to loss of potential buyers
either by stock out or by low service levels. A conservative strategy is a reactive approach which
calibrates its capacity in counter to demand (CARTER, 2011).
1.2 Designing two capacity planning strategy for increasing operational
performance
Quality of potential economic production is measured by the capacity utilization rate. Showing
as s percentage an institution is made available by the level of capacity utilization into the entry
slack which is in the economy or organization. The essential operation metric for the business is
the rate of capital utilization as well as an important economic indicator which is applied to
accumulate capacity of production(Reimann & Ketchen, 2017). A company which has utilization
of less than 100% can raise production without sustaining costly overhead costs related to buying
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of new tools or property. Those economies which have a ratio of fewer than 100% are a
compelling important rise in production. Capacity utilization concept has been applied to the
production of physical products as these are not hard to measure (Darwish, Odah & Goyal,
2014).
Present utilization
The current progression of work process should be analysed of Call Us Plumbing. It is obvious
that the process of manufacturing has made excessive demands. In production there is 100%
efficiency yet a quality fault is found hence there is a need for an organization to find several
methods to increase its production(Ambe, 2012). Hence, the company requires making an
investment in highly developed technology, machinery and robotics mainly to raise the
production and to decrease the load of work on human capital. The company gets help from it in
making deals with excessive production in a consistent way (Gustafsson, 2009).
In order to execute this strategy following strategies could be considered:
Last Week`s actual Production was 18000 products
The effective capacity is 12000 product
The design capacity is 200 product/hr.
The operations of Call US Plumbing are for 7 days per week and there is a shift of 3-8 hrs. per
day
The efficiency could be 84.6%
The efficiency of the new line would be 75%
The utilization rate will be 53.71% {(8*3*7)* (200)}
One of the other strategies for increasing efficiency is related to forecasting. Call Us Plumbing
could also concentrate on predicting future trends in the demand of customers and then
production or stock could be maintained according to those trends. It is vital for the company to
predict or forecast the trends in the demands of the customers (Jurevicius, 2019).
1.3 Implement one capacity planning strategy
Call US plumbing is suggested to implement a capacity planning strategy for estimating the
requirements for future capacity (Hemmati, Fatemi Ghomi & Sajadieh, 2017). The existing
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facilities and capacity of the firm shall be evaluated along with an assessment of the gaps.
Alternates could be identified for encountering the requirements. The alternatives could be
evaluated on the basis of financial analysis. The lag strategy could be beneficial for Call US
Plumbing (HITT, 2011). As this strategy is conservative in nature in comparison to the lead
strategy which is aggressive in nature. In the case of Call Us Plumbing, the stock of the product
is high and the demand is quite low. The lag strategy could be implemented as it will enhance the
capacity only when there will be an upsurge in the customer`s demand for the products and
services of the company in actual. The lag strategy will assist Call US plumbing to make sure
that best returns could be acquired on their investments. As the lag capacity strategy leads to
reducing waste and enhance the capacity (Borgström & Hertz, 2011).
1.4 Diagram of the model for the capacity planning strategy
Model of Capacity Planning Strategy
The lag strategy could be implemented by Call US plumbing by considering the above diagram
which involves all the requisite steps (Mohan, Alam, Fowler, Gopalakrishnan & Printezis, 2014).
The lag capacity strategy shows the capacity which is added when the organization generates
100% capacity due to the increasing demands. Such strategy is conservative as it teaches about
waste risk however it can move towards loss of skilled purchasers through stock out or by the
low level of services. Such a strategy is known as a reactive approach as it makes adjustment in
its capacity to give its response to the demands(Lotfi, Sahran, Mukhtar & Zadeh, 2013).
Following strategy can be adopted by management of college plumbing Limited
for optimising their capacity-
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Location- First of all the management of the company should ensure that that all the suppliers
and transportation facilities are available for transporting raw material and finished goods within
and outside the organisation. This will help in reducing overall cost of two operation
significantly by controlling transportation cost.
Automation- Majority of operations in the organisation should be conducted with the help of
automatic machines. Primary focus of the organisation should be on employing skilled and
experienced employees for operating these machines as advanced technology will not have any
productivity for organisation if not handled in effective manner.
Resource allocation- Use of Advanced technology will not produce any value for organisation if
all the resources are not integrated properly for achievement of goals and objective. Therefore
integration of resources should be in such a manner that full potential of each resource can be
attained.
Forecasting- Management should be able to identify demand of their own product and services
in market. This forecasting will help in making amendments in operational capacity of the
organisation so that supply can match the market demand.
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Ideal
Capacity
Planning
Forecasting
Automation
Resource
allocation
Location

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2. Inventory and Stock
2.1Two Inventory and stock management strategies
Inventory management is almost one of the unfavourable functions in any of the organization.
An efficient system of inventory management makes the organization respond in a quick way
among the demands of the market, it also delivers a cost reduction which is worthy through
holding the favourable goods (Pramudyo & Luong, 2017). An inventory which is falling short
changes into lost sales opportunities, however, a surplus inventory makes demands for
operational costs which are not necessary for terms of storage, transportation and handling.
Mobile Inventory management
Mobile Inventory which is listing with inventory real time is being used by associates and store
managers for a correct track stock, and to enhance customer service as well as to make strategies
for offers and promotions (Gunther, 2011). Inventory can be followed an update with the help of
Mobile inventory management to an undeveloped level besides it facilitating information about
real-time inventory, details of a product, information about brand etc. to the associates of the
store. Steadily acquiring knowledge about this certifies the associates of the store to get attract
with customers, motivation for the decisions related to purchase decisions and to formulate leads
(Sehgal, 2011).
Data analytics
Day by Day data analytics is used to make effective use of inventory management. Companies
get help to look towards inventory from the side of organization-level in spite of branch level.
Real-time data is used by it to make an estimation about market demands, as it supports the
companies to scale their inventory up or down according to time as outcomes are in the form of
profits and cost benefits (Sharma, 2017). Managers of inventory make use of unique perceptions
as adopted from the data analytics as adopted from data analytics to establish inventory to a new
place and to take advantage of market opportunities (Reimann & Ketchen, 2017).
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2.2 Inventory management tools using widely accepted approaches
Inventory management plays a vital role in the success of an organization. Domino effect can act
as an issue over all the economy of an organization. The lag which is present in the economy is
used to be created by the stock which is left unsold. The things which cannot be desired are a
surplus of stock and shortage of products (Piasecki, 2009). The problem faced by firm and
consumer is the shortening of stock or if the inventory is out of stock. Below are some of the
inventory management tools that help in the management of inventory:
Re-order Alert
Low inventory alerts and reorder alerts which appear as an effective inventory management tool
to aware the users when there is a time of reordering at a particular time. Awareness is observed
when the level of goods attains its reorder level which is already determined. The system of
inventory management is capable of performing this as it is able in observing the amount of
every product and it observes at the time when the entire level of the product has gone down
(Lotfi, Sahran, Mukhtar & Zadeh, 2013).
Inputs are:
By bearing definite information about inventory like expected demand and sales history, the
company can determine the requisite level of safety or buffer stock and then reorder alert could
be set by considering this amount (Vrat & Sharma, 2018).
Outputs are:
 Trim down the time spent on viewing inventory levels and buying
 Lessen the efforts as done manually with the help of automation.
 Raising the accuracy of inventory levels through automation.
 Further software of inventory management might be capable of making the buying of the
element of reordering goods even steadily and easy.
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2. Report
Reports can be made with the help of making the use of report function in the system of
inventory management. Information and data are taken out from the database of the system to
develop a report with entire information which is essential. Instances for categories of forms of
available documents and training are reports about sales, reports about inventory and reports
about purchasing. Optionally, reports could be customized, as explained that changes can be
made in reports as well as an altered version of a standard report or for business, it is
personalized mainly to show the particular information(Ambe, 2012).
Inputs: For establishing optimum amounts of inventory such report can be used, such amounts
are down to the product level by showing information like Assessing inventory through the
product; Particular consumer giving a history of sales.; Information about inventory through
many or serial number.; Reorder reports of inventory which show all the goods that are required
for reordered (Wang, Huang & Tung, 2016).
Outputs are: Reporting benefits are that the company will be able to observe the complete and
all required information for a while. It is an option for saving time and effort for looking
manually on all the data and information in a separate way. Further, due to the automated method
of gathering information, proficiency for making mistake could be highly decreased (HITT,
2011).
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2.3 Model of an ideal inventory management system or framework.
Below model could be considerate as an ideal inventory management system for Call Us
plumbing:
Figure 2: Inventory Management Process
The above model could be regarded as an ideal system as it consists of the all requisite aspects
for effective inventory system. This system emphasizes the aspects related to the purchase of
products and then sales; suppliers manager will focus on the supplies and managing or operating
supplies; the employees will record the inventory left out after sale; accounting manager will
keep the accounts of inventory purchased and items sold out; inventory status reports could also
be carried out through this system; the expiration of the product could also be accessed through
this system (Tyagi & Aggarwal, 2017). As the proposed system facilitates in tracking the
inventory and managing information about it’s such as- purchasing date of inventory, date of
sale, dispatch and the date of expiry as well (Burf, 2009).
Detailed explanation of model used for inventory management would be as follows-
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Suppliers
Acquisition of Raw
materials
Process materials into
finished plumbing parts
Completion of
plumbing parts