Executive Summary
Being well above the bottom line motivates and ensures continuity and existence of any business. Purchase and inventory functions are involved in answering the questions about frequency and patterns of fresh orders; when to experience low sales, thresholds levels for routine operations and how better to plan future operations (McNamara, n.d.).
Inventory objectives are guided by factors such as minimizing investment; establishing operations level for customer services; balance demand and supply schemes; cut costs for procurement and carrying costs and modernize inventory control system. Grandiose Motor Dealership uniqueness and advantage of stocking items from different Motor Companies presents an inventory and management function with an option of opening up customer selection and purchase. Customer enquiries based at dealership and an online support system.
Grandiose Motor Dealership should keep a close track on consumer behavior; day time trends, weekly patterns and season patterns (Waight, 2010). This is important in establishing a way of projection the customer trends thus the Dealership can programme activities in the future. According to Bala (2008) the inventory is driven by how-much-to-order and when-to-order aspects and this plays an important customer insight as it will influence the design of the inventory. It can influence and enhance policies for buying, sales, pricing criteria as well as on handling of the customers (Sage Businessworks, 2008). A rich inventory will provide further for regular customer, his/her purchase profile and demand pattern; this is important for inventory modeling (Bala, 2008).
Policies and procedures of purchasing and inventory management may be influenced by the following: backdoor selling maneuvers by salesperson; time spent with the salesperson, arrangement for purchase transaction in terms of span of time; based on defining the operations ethics; the full responsibility vis-Ă -vis authority may differ; full responsibility vis-Ă -vis sufficient time for the purchase operations; complexity in coordinating purchase; conditions set for purchase process; efficiency of delivery logistics; cost savings made during transaction process; respect among parties in the transaction; purchase capacity handling and duration spent before availing items that supplier may not readily be having.
The dealer should maintain a convenient and sufficient inventory as well as be flexible when conducting negotiations. The dealer should also set purchase objectives, educate potential supplier and observe diplomacy when handling the suppliers. Inventory and purchasing control should be set for record keeping; while purchases should be organized and administered accordingly. And finally should be to improve with time.
Introduction
Grandiose Motors Dealership baseline like any other is to maintain well above the bottom line. Purchase and Inventory functions present a manager with questions of the following genera: frequency and patterns for new orders? When to anticipate low sales? What are the general routine threshold operations levels for the business? How well to plan for successful future for the business operations? Inventory control can be guided by the following objectives: reduced inventory investment; establishing right level of customer service; find equilibrium for the supply and demand for the different items; scale down procurement costs as well as carrying costs and operate a modernized inventory control system (Blackburn, n.d.).
Discussion
Grandiose Motor Dealership introspection into their business set up can help understand and recommend about the appropriate inventory functions. The unique attractions for Grandiose Motors Dealership vis-à -vis other dealers; stocking different car makes can be illustrated as “all-under-one-roof” where customers of different tastes congregate to shop from a generic of items that perform same function. With regard to Grandiose Motors Dealership a customer may end up purchasing totally different item from the initially intended especially where the is impressed by a feature in another item which he/she was aware, regarded or had not made up mind about what to purchase.
Although this can be theoretically accounted than be practically quantified, this cannot be ignored factor as boosting Grandiose Motors Dealership. Customers are using this flexibility and thus the Dealership should be fully aware and make sure such customers still enjoy this trade-off that is missing in other Dealership in the area. The Dealership inventory management should insist Grandiose Motors diversity of choice and make advancement along this line to maintain as a popular destination for this unique opportunity.
A high-end feature inventory management system is attractive to customers (Sage Businessworks, 2008). Such utility will support a cataloguing of images of parts, product’s serial information, where they are situated within the Dealership and all other item’s classified details.
Each of the different items will have a classified information portfolio which details the customer what to find from the Dealership. An online open access facility will be pivotal especially for those who would like to make comparisons before purchase as well acquainting with Dealership before the physical visit. This is important especially in reducing the shopper’s time spent while physically shopping in the Dealership. Online system with the cataloguing would help in the customer purchase (open access) operations; contain all the products and their full details. Customers should also be notified of the products that are immediately available and those that are out of stock and when they will be available.
Customers should also be provided with an online account so that in case of any enquiries they can direct raise their complaints. A physical enquiries desk can be set up within the Dealership to receive enquiries from those customers coming for their shopping. Since the Dealership stock varieties with this kind of inventory, those items moving can be given low priority when stocking especially when relying on enquiries from customer to know which of the items customers want on the shelf while those low in demand are given low priority on the shelf. Analysis from these enquiries can also help in projecting what to be supplied in future and their quantities to be ordered for.
A rich data on these combined with the real purchase can help in projecting trends (seasons which purchase patterns repeat themselves) on behavior of purchases by customers at different times of the year; trends on how individuals are moving in the dealership.
Where sequences have established, data can be mined using the GSP algorithm (Bala, 2008). With the multi-product handling, this will also boost competition for selling space as different item supplies would like their products to be preferred for the sale by the dealership (Bala, 2008). More emphases should be laid specific items than a product line since spares of a specific vehicle may sell fast while a fully assembled vehicle of the same kind may experience a slower flow. And with this kind of trends the Dealership is presented with a scenario where it can analyze why the case is so (data mining). Stocked in a way is inclined based on customer taste.
According to Bala 2008 the inventory is driven by how-much-to-order and when-to-order aspects and this plays an important customer insight as it will influence the design of the inventory. It can influence and enhance policies for buying, sales, pricing criteria as well as on handling of the customers (Sage Businessworks, 2008). A rich inventory will provide further for regular customer, his/her purchase profile and demand pattern; this is important for inventory modeling (Bala, 2008).
The inventory can help establish on purchase patterns based on their timing; those made during weekends may differ from those on the week days, daytime patterns may differ for instance evening hours from daytime hours. A credible inventory control system should factor in: replenishment of goods commensurate to demand; seasonal fluctuations; varying consumer tastes and preferences and account for shortfalls. Thus the inventory system should support positive trends in sales while holding investment at their minimal limits consistent with customer satisfaction (Pearson Education Australia 2007).
Purchase Concepts include: ABC Classification System where items are grouped based on periodic sales volumes when trying to establish the building block items that make the most sales and those that control inventory management practices. Items are simply identified using the alphabetical letters. The lead time approach involve calculating the time between placing an order and when ready for dispensing. Safety stocks are the additional units of inventory meant to be buffer against unnecessary stocks outs. These are undertaken during uncertainty times of item demands. The reorder point is the recommended inventory level when to restock. Inventory turnover rates can be efficacy of the inventory control system. A low turnover rate reflects slow movement of items.
One of the basic functions of an inventory is to uncouple the successive operations that are involved from the manufacturing of a product up to its distribution among its consumers (Magee n.d.). By doing so inventories make an operation independent of the other and thus eliminating the need to conduct these operations at the same place. In this case two inventories are considered, movement inventories and organizational inventories (Magee n.d.).
Movement inventories are concerned with the transportation of stock form one point to another (Magee n.d.). The amount of a movement inventory is given as the product of the average sales rate and the time taken to transit stock from one stage to the other. Organizational inventories naturally are carried out between the various stages of the manufacturing – distribution process (Magee n.d.). The more they are carried out the more smoother the manufacturing – distribution process becomes however they are expensive to carry out on a large number. The need for organizational inventories would arise when its potential user buys materials in excess of the immediate purpose, or where shipping costs are to be kept at a minimal.
Another function of inventories is captured by fluctuation stocks, this is stock kept on stand – by, by a business to respond to unpredictable shifts in demand from consumers (Magee n.d.). Another function of inventories is seen in anticipation stocks; these are kept where the pattern of consumption of goods can be predicted throughout the year (Magee n.d.). Variations in this pattern can be useful in cutting operational costs as a business can build new inventory and deplete the older one when it is most economical.
According to Blackburn (n.d.) close connections exist between rationales for purchasing and inventory management. These bonds are mutually inclusive with inventory guiding purchases, in terms of: quantity and quality to be bought; when to order and their prices and which source. Notwithstanding the physical routines involved in inventory and purchasing management, they hardly receive the kind of attention they deserve. The fact that purchase is viewed as more of acquisition for more to sale than an investment process, while, inventory as a mundane record keeping operation. However, the complex and working purchase systems used have to this two aspects being at the backburner.
Acquisition systems are tailored to cut short time to attend to the purchasing and inventory while being able to concurrently undertake data mining to advance knowledge on decision making. Inventory control will be used to establish whether an item requested by a potential customer is readily stocked or not (Serenic Corporation, 2002). On this line a more reliable inventory control system should be applied to ensure the Dealer does not run out of stock of an item.
Policies with regard to purchasing should be flexible to allow for an anticipated changes and special opportunistic price favors from suppliers. When attending to the purchase policy consider whether: policy reviews have been allied to the dealer’s desired operations; are their policy directives on who to handle item purchases authoritatively as well as handle tenders; how much outsourcing when undertaking the policy formulation; does amounts from suppliers at a time warrant personal direct dealing with the supplier; are sales personnel well competent enough and are their met when dealing with suppliers such as back door sales, delivery delays and unsolicited favors (Blackburn, n.d.).
Policies and procedures purchasing and inventory management may be influenced by the following: irregular selling procedures where employees (or other indirect person within the establishment) are used in the sales (by a salesperson) circumventing set protocols pressurizing the buyer to consummate a sale; time spent with the salesperson, most operators prefer setting aside during the week to meet and present their bids; salespersons may differ in how they perceive ethics when handling a buyer; the full responsibility of the in the transaction vis-Ă -vis authority may differ; full responsibility of the buyer in the transaction vis-Ă -vis sufficient time for the purchase operations; complexity in coordinating purchase within respective departments; demands made during the purchase processes; delivery logistics and time lost; cost savings made during transaction process; flexibility of the salesperson handling a junior staff from the Dealership; salesperson disregard and demeaning of the Dealership (as to mean cant handle small business holdings); limited storage capacities so as to protect merchandise after purchase and duration spent before for availing items that supplier may not readily be having (MidiaWiley, n.d.).
The dealer should maintain an adequate supply for items; make investment when necessary by the buyer establishing a trade off between the investment level and risk of stock running out; ensure quality standards of the items is not compromised while minimizing cost of acquisition and maintain the establishment competitive edge (Kern County Administrative Policy and Procedures Manual, n.d.). The buyer should continuously ensure performance is improving; these can be achieved through attending seminars, trade fares, and continuous in-house training and association meetings. The Certified Purchasing Manager (CPM) can be obtained.
Overall supplies person should plan, organize, direct and control staff under his/her jurisdiction appropriately; ensuring items are effectively purchased, received and stored with the right accounting and marketing procedures followed. Buying parties should maintain rapport with the suppliers, diplomatic and cordial relationship comes in handy. Buying parties should proactively relate with potential for instance relaying information on how better they can their performance; suppliers who are up to date can provide services to match those needs. This makes the supplier feel in close contact with the buyer.
Conclusion
Grandiose Motor Dealership ought to develop a very comprehensive inventory management system that will purchase activities especially considering the wideness of its operations that factors wares from different and competing sources. The environment in which Grandiose is operating is sensitive considering other dealers around deal with single line supply of their wares. So as to sustain their customers their need for the inventory should be well maintained and tracked; data generated from the records should be pivotal in analyzing the business environment and projecting the future (Infor, 2010).
Analysis should cater for all transactions that have taken place as well as where the customers have been enquiries; space within Grandiose premise is limited to stock all the customer wants thus a competitive stocking is adopted so as to make the Dealer stocks what is being demanded by the shoppers. Such a competitive environment should not neglect certain factors of shopping: spares stocked from a given manufacturer can move faster than the whole assembled item. However, the buyer should keep close relationship with its suppliers to ensure smooth transactions.
Reference list
Bala, P. (2008) Retail Inventory Management with Purchase Dependencies. Web.
Blackburn, J. (n.d.) Fundamentals of Purchasing and Inventory Control for Certified Pharmacy Technicians. Web.
Equipment purchase and inventory control policies and procedures purpose. Web.
Infor. (2010) Supply chain management. Web.
Kern County Administrative Policy and Procedures Manual (n.d.) Purchasing Procedure. Web.
McNamara, C. (n.d.) Operations management. Web.
MidiaWiley. (n.d.) An Overview of the Purchasing Function. Web.
Magee (n.d.) Guides to Inventory Policy: Functions and Lot Sizes. Web.
Pearson Education Australia. (2007) Financial Services Resources Learner Guide. Web.
Sage Businessworks. (2008) Inventory Control. Web.
Serenic Corporations. (2002) Purchase Requisitions. Web.
Waight, P. (2010) Production and operation Management. Web.