Scientific Glass Inc is a company that specializes in the manufacture and distribution of high-quality scientific glassware. Effective inventory management is crucial for the success of the company as it helps to ensure that there is a sufficient supply of raw materials, finished products, and spare parts to meet customer demand. In this essay, we will examine the various factors that influence inventory management at Scientific Glass Inc and discuss the various strategies and techniques that the company uses to optimize its inventory.
One of the key factors that influence inventory management at Scientific Glass Inc is the demand for its products. The company must maintain an adequate level of inventory to meet customer demand, but it must also be mindful of the cost of carrying excess inventory. If the company holds too much inventory, it may incur higher storage costs and be at risk of stock becoming obsolete. On the other hand, if the company does not hold enough inventory, it may miss out on sales opportunities and disappoint customers.
To manage demand, Scientific Glass Inc uses various forecasting techniques to predict future sales and adjust its inventory levels accordingly. The company also uses just-in-time (JIT) inventory systems to ensure that materials and products are delivered to the production line or warehouse as needed, rather than being stockpiled in advance. This helps to reduce the amount of excess inventory that the company holds and minimizes the risk of stock becoming obsolete.
Another factor that influences inventory management at Scientific Glass Inc is the lead time required to produce or acquire materials and products. The company must ensure that it has a sufficient level of inventory to cover the lead time to avoid production delays and shortages. To optimize lead time, Scientific Glass Inc uses a variety of strategies, such as maintaining relationships with reliable suppliers, implementing efficient production processes, and using inventory systems such as consignment and vendor-managed inventory.
In addition to demand and lead time, there are several other factors that influence inventory management at Scientific Glass Inc. These include the cost of raw materials, the cost of holding inventory, and the risk of stock becoming obsolete or damaged. To mitigate these risks, the company implements various inventory control techniques, such as setting minimum and maximum inventory levels, conducting regular inventory counts, and using software systems to track and manage inventory.
In conclusion, inventory management is a critical function at Scientific Glass Inc, as it plays a crucial role in ensuring that the company has a sufficient supply of raw materials, finished products, and spare parts to meet customer demand. By forecasting demand, optimizing lead time, and implementing effective inventory control techniques, Scientific Glass Inc is able to manage its inventory effectively and achieve long-term success.
First of all, if we talk about the fill rate policy of the company then the market average is 92% fill rate while the company was maintaining a fill rate of 99%. Demand of east region will be met from Waltham, demand of west region will be met from Phoenix and demand of central region will be met from both warehouses, assuming to have equal shares on the central region. The stock held by the salespeople did not count towards their target warehouse stock, which necessitated warehouse manager to increase their inventory levels. This case focuses on the business challenges of inventory control and order processing, particularly the tradeoffs between centralized and decentralized inventories. .
Scientific Glass, Inc.: Inventory Management: [Essay Example], 1054 words GradesFixer
Secondly, the managers of the inventory management have developed the policy that the supply of the company should not exceed a period of 60 days. If the company only had one warehouse, and implemented the 99% service level target, the inventory levels would not be as high as they are currently and the manufacturing costs would be reduced. The company will have to pay more money for the logistics of a centralized warehouse. Transportation Costs: Transportation costs for different options would be calculated for the two products, namely Griffin and Erlenmeyer. In addition, it can expand into new areas.
Scientific Glass, Inc: Inventory Management Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies
The company had also exceeded its target debt to The newly hired inventory-planning manager has been tasked with developing the strategy for the management of the strategy without requiring any more capital investment. The trunk stock kept by the salespeople affected the inventory levels for their specific warehouse, which resulted in higher restocking requests. Thus, employees must be encouraged to use the available technology and train the skills required to operate the latest and the most advanced equipment. This is where a small business must keep its inventory. Holding more inventory levels than required results in increased inventory costs across all the warehouses. If the company still insists on keeping fill rate at 99%, the additional costs that must be paid to maintain 99% fill-rate level is lowered in the outsourcing alternative. The company replaced the earlier fill rate policy of 93%, which is only marginally better that the industry average fill rate of 92%, with 99%.
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Outsourcing warehouses will also enable them to reduce the inventory management costs. If a product was not available at a warehouse, then the customers had to wait for three weeks for the shipment of the order and the sales leadership team had identified that the extra costs of providing this product. It can increase its capacity and improve its efficiency. By January 2010, a substantial increase in their inventory balances tied up the capital needed for investment for expansion. Therefore, all of these factors led to the growth of excess inventory at Scientific Glass Incorporation.
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This amount rises significantly with the increase in the number of warehouses. However, this is open to discussion and most of the times, the warehouse managers also exceeded these limits and they were keeping higher levels of inventory. Thus, there exists a discrepancy in the inventory record and actual inventory. To improve customer response time they added six leased warehouses throughout the U. The company also announced that it has planned to increase its customer responsiveness and reduce its inventory fill rate, which will oblige the company to increase-its warehouse capacity and outsource fulfillment services. On the other hand, management focuses more on increasing sales and customer satisfaction. Time Responsiveness: Delivery system of the company compensates 2 weeks of shipment cycles including the stock-out situations.
Scientific Glass Inc.: Inventory Management Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies
The centralized inventory system at Waltham warehouse was not capable of capturing the inaccuracies caused by stolen, damaged, and lost goods. Because business environments are dynamic and unpredictable, it is difficult to predict everything. This option may also consider including the warehouse at Dallas In addition to the main warehouse at Waltham. . They can also increase the responsiveness of their services to customers by reducing the inventory levels.
Scientific Glass Incorporated: Inventory Management Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies
. The optimum service level is a function of the inventory levels. . . Lean supply chain management essentials: A framework for materials managers. A typical warehouse management system collects inventory data using a handheld or fixed device and sends it to a software solution. .
. The amount of long-hour flights has increased significantly. This situation causes high inventory levels than required and also high inventory turnover. . Weighted-average biweekly inventory levels are found as: 8 warehouses : 98853 2 warehouses : 68034 1 warehouse : 59703 Outsourcing : 59703 When outsourcing option is used, it will be the same for the company in the sense of kept inventory levels for the one-centralized-warehouse option therefore they are assumed to be equal.
Scientific Glass, Inc: Inventory Management Case Study Solution for Harvard HBR Case Study
For changing the number of warehouses, in other words, centralizing or decentralizing warehousing functions, the different options considered are as follows: Centralized warehousing in Waltham: This option uses a single central warehouse near to manufacturing facility at Waltham and will send all customer orders from this one location. The supply chain managers should implement just in time policy systems within their inventory management systems……… This is just a sample partical work. This would reduce the level of the inventory and fulfill all orders on time. Begin with the review type; although firm monitors the entire inventory transfers from Waltham warehouse to other warehouses; they think taking physical counts of inventory at all warehouses. It was done to respond to customers in a short notice. The centralized warehouse will be able to handle demand of goods from both regional locations. In this case, it becomes difficult for planners to review the data in real-time.
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Evaluation of different options will be conducted based on the following five parameters: Transportation costs, Average inventory levels, Time responsiveness, Fill rates and Additional costs and benefits Since all the products of scientific glass can be arrived out based on the analysis of its 2 products namely Griffin and Erlenmeyer, since they are mentioned as the best representative for a total of nearly 3000 products of Scientific Glass, all the parameters are analyzed for these products to arrive at a conclusion. . The company can concentrate on the larger customers of the company by placing more products and increasing the number of the warehouses that are operated by the company. The company has introduced a number of inventory requirements such as reduced There are a number of factors that had contributed to the increase in the average level of the inventory at Scientific Glass Incorporation. Since some of the simultaneous changes can be done, considering ceteris paribus principle and when fill rate is maintained exactly as 99% for all warehouses, we can calculate the average inventory level that must be kept at warehouses.