The Privileged Fly
Joan Glass the supply manager has to change to the new way that world-class organizations use the five value- adding outputs of proactive procurement to be able to determine what actions to she needs to take. She has to use make sure the materials she purchases are quality products for the inventory. She has to work to reduce the total cost to acquiring and to move the products.
She is going to have to use her time wisely to use the outside suppliers to get her the inventory that is needed. She is going to have to use technology to keep a current record of the inventory on hand and what is going to be needed in the future. She also needs to build strong ties with several different suppliers to be able to call on the other supplier if the other supplier falls short on being able to keep her supply from being disrupted.
The upper top is going to have to decide on an amount of inventory that would be able to cut cost down but, not to put the amount of inventory to be so short that the rest of the team doesn’t have the materials to be able to finish their orders without creating a conflict with the finance department and not to tie up unnecessarily amount of money in the inventory. If they don’t decide on an amount to keep the stock it is going to keep costing the company on the receiving side of the inventory and increase cost to supply to the customers.
The production manager that complaints about being out of stock of any item will not hold water if the supply manager is keeping the inventory at the levels that the upper management have decided on to keep on hand. If they use a keep a reasonable amount of inventory this will cut down on out of stock items, shutdowns, shipping costs, and the fights between the departments. If the inventory then fails to meet the needs of the other departments it can be blamed on the faulty policies of the upper management.
Q2. Some of the factors that have contributed to this situation are that they have had to use premium means of transportation to send parts, because of the short amount of inventory that is kept on hand. This is something that management is going to have to look at to decide the cost of keeping a certain percent of inventory on hand is cheaper that the rising cost of air transportation. As the high cost of fuel increases the cost to ship by air is increasing the ost to keep the correct amount of inventory on hand is a very important decision that upper management needs to address.
This falls in the area of basic economics of doing business and working with other means of transportation. Q3. Ms. Glass must present the idea to upper management for the need of a strict policy on a reasonable amount of inventory to be stored and the scheduling of orders. This area affect many different areas like: carrying costs of inventory, freight costs, and customer satisfaction to complete the orders.
She needs to focus in her report about the inventory problems and the way the company would be able to avoid the high air transportation costs. The entire company must work as a team to commutate better with each other to make better decisions to know what is going to be needed for upcoming projects, so the inventory is there when they need it. This will help her to control the costs in her department and this would help control the cost for the shipping department as well.
They need to meet together each day for about thirty minutes to make sure everyone is working on the same goals to make the company more profitable. Q4. She should suggest a materials manager because; with a company that size with over $70 million of purchases needs this internal control. A material manager could focus on discounts on orders and keep up with the production department in order to know what inventory is going to be needed in the future. She can save enough money that they have been wasting to pay the material manager’s salary.
Q5. She first will need to know what upper management is willing to let her have as an inventory base. She may need to have a better inventory management system and not a bigger inventory. She needs to educate herself on the different ways to manage supply, for example: the (JIT) just in time method. There will be some times that there will not be any other way around get the product to the customer but to ship by air. She has to really focus on the inventory that is going to be needed to produce the parts that is needed for the upcoming jobs.