Company A’s Inventory Systems

Executive Summary

The inefficiency of Company A’s inventory systems has dealt a major blow to turnovers and overall firm efficiency. The Company has observed that goods have been poorly stored and disposed of. Moreover, some retailers have complained that delivery schedules are not satisfactory. For months, the Company executives have been discussing various ways to minimise and eventually eliminate the ineffective inventory system. After rigorous deliberations, the Company decided to install a team that will handle the development of a new inventory scheme. This system is expected to be integrated with quality as the major consideration.

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As stated, quality is an element that needs to be existent in the inventory system. Each stage needs to be studied and assessed before finally installing the system into the entire supply chain. There are three important levels that the system needs to cover. These include documentation, warehousing, and delivery strategies. The system will mostly deal with the mentioned activities since most problems are observed in these general levels. In addition, the system will integrate quality measures and best practices to maintain and sustain and effectiveness of the system. This is done through proper planning and definition of the entire project.

Project management will play a prominent role in ensuring that the needed steps are all evaluated before application. Aside from the improvement in handling the inventory, the Company needs to consider the impact of the system on the internal and external entities. For instance, personnel have to be properly trained to ensure that the adjustments are properly carried through. Retailers have to be informed about the changes and the effect on delivery schedules.

Introduction

There are several reasons cited by the Company as to the necessity of the proposed inventory system. The rising cost of maintaining goods in the warehouse is the foremost driver. Moreover, the Company noticed that delivery times have been slow and the transfer of products is affected. In addition, the inventory system is expected to boost the entire supply chain. There were several aspects that were suggested as to the processes involved in the system. The most important part as identified by the Company is the inclusion of quality. The systems will be designed based on established inventory models and other innovative processes.

The proposed inventory system is framed after the renowned just-in-time inventory method. The goal of the Company is to maintain a sufficient quantity of products in the warehouse to take advantage of seasonal spending. The system is designed to limit defects by calculating the demand through orders. The inventory system also includes warehouse management. This process maintains the quality of products. Another aspect included in the system is strategic delivery. Before, deliveries are done when orders are determined. The system, however, ensures that delivery time is reduced and the transfer of goods to the market is improved.

The system is a combination of manual and technological advancements. The Company has designated a team to handle the development process. The budget is amply provided and resources are made available. The use of inventory software will be evident in the final system. In addition, personnel will be provided to maintain the efficiency of the system. The initial goal of the Company is to receive string feedback from both internal and external entities.

Quality Management

Ireland (1991) states that quality definitions have focused on the satisfaction of customers instead of the efficiency brought about by systems to firms. The necessities of the customers serve as the building blocks that guides firm in creating quality systems. In the situation where the Company is involved, the needs of the customers greatly affected the decision to change the inventory system. The Company, however, also considered other aspects in devising the proposed scheme. The balance between the needs of the customers and the goals of the Company is essential.

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There are some concrete steps that need to be undertaken to ensure that quality is achieved. Kerzner (2003) provided a comparison of experts’ views on guides to meet quality standards. The Company has to instil awareness in the organisation that changes need to be done. Goals have to be set and proper resources have to be pooled to realise these goals. The Company has to ensure that progress of the project is recorded and ample adjustments are made during the course of the implementation. Most importantly, the Company needs to sustain all the positive effects created by the inventory system and channel these to other weak points.

Quality starts with the development of the project cycle. The cycle determines the processes that are needed for the project to be successful. Kloppenburg and Petrick (1999) characterised the product life cycle as the process of creating concepts, developing the ideas to finished products, and terminate the products. Project managers usually divide the process into stages so that projects are managed with efficiency. Gray and Larson (2003) stated that the project life cycle gives a framework that identifies the key issues and sources of conflicts.

As Evans and Lindsay (1993) suggested, planning is a critical stage of quality management. The first stage of the cycle relates to the conception of projects. The management sets lofty goals that have to be achieved given a period of time. The goals are in line with the inventory targets of the company. After the management has decided on the conceptual guidelines, the next manoeuvre is to incorporate the ideas to all entities in the organisation. The final step in the first stage allows the management to delegate individuals who will be tasked to manage and maintain the project. Quality personnel are selected to ensure that goals are met.

Hormozi et al (2000) explained that the development of the project has to produce a master plan. The master plan will detail the manner in which the available resources will be used to make the project succeed. The primary attributes that have to be promoted in this stage are aggressiveness and comprehensiveness. The master plan illustrates the budget and the schedule. Budgeting is important to prevent constraints once the project starts the realisation phase. The schedule reveals the number of days required for the project to be finished and eventually be incorporated with the current production process.

The execution covers the performance of the project that requires control (Evans and Lindsay, 1993). Regular monitoring and measuring of performance are advantageous for the project. The control phase also ascertains areas where improvements are needed and the failures of the project. The project team can mitigate the adverse effects of the problems in execution. Control also pertains to the analysis of risk in the execution. The execution deals with the proper management of resources. In projects, procurement is a vital entity of execution. The procurement of required resources will decide the quality of the system.

As soon as the project reaches the apex, it will show signs of decline and eventually termination. In this stage, the manpower resources and commitments are transferred to other organisations or in some active projects (Stuckenbruck, 1981). In the termination phase, the team will draft reports informing the higher-ups of the organisation on the matter concerning the success and failures of the project. The reports will likely shape the organisation’s project dealings in the future. As a document, the report provides an accurate basis for pursuing other projects that are predicted to provide greater benefits.

The purpose of the Work Breakdown Structure (WBS) is to identify the tasks that have to be performed to accomplish the project. The process shows the main objectives and specifies the courses of action to attain the goals. (Pritchard, 1999) Taking the example, of the modified project cycle, the first task is to illustrate the main project. Then, the species are distributed to the different stakeholders. After the planning is done, a steering committee is created to handle the implementation of the project. In the implementation phase, there are four subtasks that include: information dissemination, training and assigning of tasks, supervision, and assessment.

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Dawson (1996) added that shifting to quality management means systems and strategies. The inventory project is designed to provide a long term solution to the ongoing problems of the company. Because the project is built through systems, it is expected that the building blocks of the inventory are of high quality. Processes installed are properly assessed and resources are efficiently allocated to address the needs of the Company. Aside from the internal aspects, the Company is concerned about the reaction of the customers. In addition, obtaining feedback from the suppliers and distributors is valuable in measuring quality.

Quality Planning and Assurance

The planning process is an important segment that allows the Company to meet the standards needed (Wong and Evans, 1997). The first step that the Company needs to undertake is to ascertain the quality objective. Then, the procedures will be documented and the needed resources will be acquired. The performance of the procedure is the most meticulous part of the process. Then, ample performance evaluation procedures have to be made to satisfy the demands of the clients and the Company. This process is maintained using the resources that the Company has provided.

In terms of quality standards, the Company assures that all processes are guided in accordance with internationally recognized procedures. There are also techniques that the Company needs to use to accurately determine quality. Time analysis is one of the aspects that are valuable to the project. This is the method that allows the Company to measure the actual time used in completing the project to the expected period of completion determined in the planning stages. Another important quality assurance mechanism is resources analysis. In this tool, the Company compares the resources used by the company to run the project with the expected resources needed for the project.

Perhaps the most critical measurement that the Company plans to use to measure quality pertains to cost analysis. There are several ways in which the tool is being used. Cost is encompassing and also covers others aspects that have no financial value. These include opportunity costs and other intangible costs. In terms of financial cost, quality is defined as using the budget with efficiency. In addition, the Company needs to weigh the opportunity that will be lost as the project is being implemented. The key for the Company is to get the most out of every dollar spent on the project.

Milestone documentation is an important part of the quality assurance process. This document serves as the guide for the Company in assessing the progress of the report. The documentation starts with the actual conception of the project until changes are made after initial evaluations. Events have to be clearly identified and evaluated by the personnel in charge of the documentation. There are several methods that can be undertaken to document the developments of the project. Tools such as graphs for comparison and charts for reference can be used exhaustively.

In formulating the quality manual, Stebbing (1994) suggests some elements to be emphasised. These aspects include policy statement, authorities and responsibilities, organisation, system element outlines, and list of procedures. To further ensure quality, the Company has some lofty targets. By the time wherein the system has been deemed to be effective, the Company will apply for an ISO certification. The recognition is concrete proof of the Company’s dedication to quality. In addition, a third-party auditor is needed to ensure the integrity of the Company. The quality plan also includes future upgrades and projects that support the current initiative.

According to Kerzner (2003), a quality audit is an important element of quality assurance. The audit is aimed to ensure that the project goals are achieved. The audit is important that the inventory maintain the high standard of products delivered by the Company to the market. The most important aspect of the audit process is that the Company is able to identify the weak and strong points of the project. Hence the possibility of determining improvements is high. As a dynamic project, the inventory system is designed to evolve over time. This means that the system has to be flexible in meeting the demand of the changing industry where the Company operates.

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Walters (1998) maintained that performance measurement has increased because of the emphasis on accountability and performance enhancement. The task of ascertaining organisational productivity and performance has become a primary challenge among managers. Oakley (2001) described performance measurement as a tool within a larger management process that links strategies to actions and investments. Performance indicators communicate the level of and progress in performance that results from actions and investments. Sarkis (2001) added that performance measurement development is a necessary element in the effective management of organisations.

Benchmarking is emerging in leading-edge companies as an information tool to support continuous improvement and to gain a competitive advantage (Lloyed, 1997). In order to benchmark effectively, a company needs a strong strategic focus and some flexibility in achieving management’s goals. To effectively implement benchmarking, adequate planning, training, and open interdepartmental communication are needed. Benchmarking provides cost savings in executing operations and support the organization’s budgeting and strategic planning process. The Company has to perform benchmarking to determine the progress of the project.

The balanced scorecard is another tool that can provide the Company with an accurate assessment of the project (Kaplan and Norton, 1996). The process involves looking into the customer perspective of the company. The internal process of the business reveals the potentials of the company and the areas where improvements have to be made. The ability of the company to innovate and provide learning experiences among the entities is vital. The financial perspective defines the capacity of the project to satisfy stakeholders. In addition, technical evaluation is an important aspect.

Quality Control

Heidenreich (1988) contends that quality control has been developed as a primary measurement project to determine the level of conformity the system provides to the goals that were drawn in the planning stages. For the Company quality control pertaining to the inspection, examination, and testing of the inventory system against the current standards and internal performance. The process of developing quality control measures involves the preparation of programmes designed to sustain quality. The Company has installed data collection procedures to gather the necessary results. The information is then analyzed to determine the progress of the system.

In developing quality control systems, there are several considerations that have to be made. The quality management team needs to assess the aspects that have to be controlled. Given the complexity of the inventory system, there are several aspects that have to be controlled. But the most important element that needs to be controlled is the output delivered to the distributors. The manner in which products are handled in the warehouse and delivered to the market is critical. Controlling this aspect is the most important task for quality control implementers.

The standards have to be developed in the process of implementing the system. In terms of damages, there needs to be a significant reduction when the inventory system is already implemented. Before the inventory system was developed, the Company has experienced an average of 10% defects as a result of warehousing and delivery. The goal of the project is to eliminate any trace of defect once the product is delivered to intended customers. Moreover, efficiency in delivery is another segment that needs to be defined. The inventory system is designed to cut the delivery time by half.

The gathering of results is an important part of the inventory scheme. A recording system is installed to monitor the impact of the inventory system on the products. The documentation process is done in three-phase. The first stage involves the basic recording of raw results. This is done manually and installed in a database. The second part of the documentation pertains to verification and editing. There are instances when the recorded results are improperly recorded. The final stage of the documentation allows the quality control team to compare actual results to established standards. From there, suggestions for change can be justified.

There are several tools that the Company can use to determine the level of quality provided by the proposed inventory system. Two of the major measurements that the Company plans to use include cause and effect analysis and trend analysis. There are also complex measurements such as Pareto analysis and scatter diagrams. The Company plans to enhance these processes to accurately measure the level of quality. These are vital in ensuring the inventory is meeting the required standards. Aside from these measures, the quality assurance team will continuously develop the tools that are needed to accurately measure the success of the system.

The Company recognizes the involvement of employees in quality control. Personnel have to be properly trained to understand the dynamics of the inventory. The employees that will be involved in the change have to be flexible to ensure fast transition and effective implementation. Aside from the training, support coming from the leaders of the Company is vital. Allowing the employees to provide suggestions and inputs will also help sustain the success of the project. Since employees are directly involved, their involvement in the quality process is highly needed.

Conclusion

The Company recognises the need to boost the inventory system. Hence concrete processes need to be developed to ensure that such a goal is achieved. In a nutshell, the proposed inventory system is patterned after the just-in-time inventory (Ohno, 1988). The Company will formulate a hybrid inventory scheme that will mostly revolve around the idea of limiting the inventory in the stock. In addition, the Company plans to create a warehouse system that is constantly monitored. The relevance of documenting the inflow and outflow of goods is highly valued. Moreover, a delivery scheme will be created to increase efficiency and limit the cost of such activity.

Project management is considered the most critical element that is needed for the project to succeed. The process involves the identification and use of knowledge and tools to ensure that the Company objectives are satisfied. Slevin and Pinto (1987) further explained that project management is an important aspect that allows firms to deliver high-quality products and services. The role of project management is centred on the design, operations, and improvement of current systems. In addition, project management determines the value of internal and external catalysts to the project. These stressors are equated with the project technicalities to create a high-quality inventory system.

Quality is an important aspect that is necessary for the project. When quality is planned, managed, assured, and controlled, the success of the project is expected. The infusion of quality with project management is one of the many highlights of the project. The process of quality is defined as well as the changes that can happen as the project is being implemented. There are several aspects of quality that is part of the project. Each stage is critical and needs to be implemented.

Recommendation

Managing the supply chain will enable the Company to optimise the logistics capacity (Haag, et al, 2006). Using the concept of supply chain management allows the Company to map all possible considerations in ensuring an effective and efficient inventory system (Quiett, 2002). The entire inventory system encompasses inbound and outbound logistics. The inbound logistics pertains to the receiving, storing, inventory control, and delivery schedule of the products. Outbound logistics refers to the activities needed to transfer the goods to the customers.

The use of technology starts with the manner in which products are being documented. In some companies, computers applications are being used to keep on track of goods that are produced, stored, and distributed to the market. Keeping the records of these products allows the Company to accurately determine the level of sales being generated in a given time frame. These systems are also provided with backups to maintain the availability of the needed information. Most importantly, the level of production that is reached by the company is secured from unwarranted exposure.

. The need for human resources management is a priority for the Company. Barney (1991) stated that it is almost impossible to replicate the attributes that human resources bring to the table. The causal and social aspects of human resources are difficult to incorporate into other resources. Strategies are formulated based on the concept of creativity and fundamentals. The nature of human resources as inimitable will further improve the competency of the proposed inventory system. Human resources are one of the internal resources that companies have. The interaction between the personnel and the inventory system contribute to the success of the project.

Appendices

Quality Cycle.
Quality Cycle.
Quality Management Plan.
Quality Management Plan.

References

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