Purchasing and Inventory Management

Question: Discuss about thePurchasing and Inventory Management. Answer: Introduction This report is basically about the current purchasing and inventory management processes of the company Brisbane Outdoor Power Centre. The report also includes competitive advantage, disadvantage the company has in the market. The report gives the information about the supply-chain and inventory management concepts the company is using to increase the efficiency and to reduce the investment whilst. The company Brisbane Outdoor Power Centre operates its business in the Queensland city of Brisbane. It operates its business in three retail locations in the city. The three centers from which company operates are similar but they offer different product mix in their business operations. For example, one of the three centers, the outer suburban centre offers different range of ride-on mowers and other garden equipments which are suitable for larger properties. Brisbane Outdoor Power Centre was founded in 1985 by the Donald Saxon and he established its first outlet in Mt Gravatt. After that he purchased a centre named Strathpine centre in 2001 and Ipswich Store in 2004. All three centers are working properly and independently. Brisbane Outdoor is operated by the Belinda Green for last ten years and she is also the branch manager of Strathpine centre. When the owners of the Brisbane Outdoor Power Centre were going to retire, Belinda Green got chance to buy the business. She included one company named GreenPlus Pty Ltd to buy the business of Brisbane Outdoor Power Centre because she was confident that by incorporating the business will grow in future. The idea of Belinda Green was correct and company got success in future. Current Purchase and Inventory Management Process by the Company Purchase and inventory management process refers to the monitoring the procurement process of inventory by optimizing the total purchase and inventory workflow. This process includes create and maintain the purchase request for approval, evaluate suppliers and provide the discount offers, update the purchase orders, monitor the purchase orders and delivers, maintain the complete information of stock an inventory and complete monitor and report (Toomey, 2012). Brisbane Outdoor Power Centre has a wide range of products and variety of brands. Customers find reliability, performance and after sales service from the company. In inventory management, company includes consistency, presentation and readily obtainable supplies and spare parts which are very important parts of supply chain in the business. Purchasing and management of inventory and stock is an important part of business operations. Company adopts purchasing and inventory management process for the better use of inventory and raw material in the business. It uses variety of tools to maintain the procurement of inventory, management of purchasing orders and receiving process. The company is decentralized company and the current purchase and inventory management process of the company is: Tracking inventory counts, maintaining records of reorder points, creating the list of purchase orders, reviewing the purchase materials, marinating the history of purchase and sales materials, obser ving the purchasing process, assist the staff in maintaining inventory level, and managing stock and raw material (Outdoorpowercentre, 2016). Along with this, company is using demanding forecast in which it is focusing on inventory planning such as what should be inventory in the company, checking inventory level and customer service level. Competitive Advantage and Disadvantage of Inventory Management Process Company buys the inventory and stock for manufacturing goods and selling those finished goods to the customers. Managing the raw material and inventories into the production process is a complex process for the company. Brisbane Outdoor Power Centre gets competitive advantage by the effective and proper purchasing and inventory process in the market. Along with the competitive advantages, there are also some disadvantages which the company faces. Advantages: The advantages of purchasing and inventory process in the market are: Effective inventory management control creates a strong competitive position of the company in the market, Company achieves competitive advantage with its main resources such as physical resources, human resources and organizational resources which the competitor do not have, Customers come more closely to the company compared to its competitors, With the proper inventory management, company achieves more profit in terms of high sales with lower inventory levels and in market shares (Tsang, 2011), The inventory management process enables the company to identify the important customers, value of the customers and how to treat them better as compared to competitors, The effective purchasing and inventory management process enables the company to identify, develop, organize and defend the resources and inventory of the company better than its competitors, and Company achieves higher customer satisfaction level by offering trustworthy products, and providing delivery of products on time. The company is always first in the market in producing new products and services (Chase, 2006). Disadvantages: There are some competitive disadvantages which Brisbane Outdoor Power Centre faces. The competitive disadvantages are: The purchasing and inventory management process is very costly and the return on investments of Brisbane Outdoor Power Centre take a long time, One more disadvantage of the inventory management process is that it requires a lots of training to the staff, If company holds a large quantity of inventory, it needs to space to hold the inventory and it also requires more cost, and If the purchasing and inventory management process does not implemented correctly, it wastes a lots of time of the company and it impacts on the reputation of the company in the market (Hussey, 2007). Supply Chain and Inventory Management Concept Effective and proper inventory management is the key element in the business operations. Proper management of inventories such as finished goods, raw materials, work in progress, partner inventories leads the company to success (Waller Esper, 2014) . Supply chain refers to the stages which involves directly or indirectly in fulfilling the request of the customers. It includes the management of suppliers, manufacturers, warehouse, retailers, and customers. It is the coordination of production, location, transportation, and inventory to achieve the best result from the market (Arndt,2008). There are some concepts of supply chain and inventory management which would help the Brisbane Outdoor Power Centre to increase its efficiency in the market. A company can become competitive when more inventory management practices are used by the company (Pontius, 2016). There are some points related to the inventory management for the company i.e. if company wants to grow in the competitive market then company should not maintain too much inventory in the business. Do not store unnecessary stock because it will take storage cost for whole year. Company should observe the inventory items properly. Company can use bar codes or inventory tracking software to make sure that there are no counting errors in the inventory. Mistake in the counting can be the cause of false and fake promises to the customers and it can create difficulties for the company if company will not be able to fulfill the promises (JOSEPH, 2014). Products and raw materials are the most important elements for the production of the finished goods so products should be ordered on the priority. If products are placed before the time, company will have to pay unnecessary for the storage cost (Levi, 2013).Inventory management software should be there in the company to manage the inventory. Along with this, There should be a backup plan in the company in the case of failure of the system. It will lead low storage cost, sufficient use of money and delivery of products on time to the customers (Muller, 2011). Improving supply chain and reducing investment whilst: To reduce the investment whilst with maintaining adequate stock in the company, there are some points in the inventory management and supply chain i.e. by improving supply chain management, company can reduce the investment risk, improve time to market, decrease the cost, improve profitability and generate more cash.Company can improve production arrangement by manufacturing and distribution. A poor production can be the cause of imbalance in the product, high inventory investment, and reduce the customer service (Donovan, N.D.). Along with this, Company can reduce its cycle time by reducing cost, reducing inventory levels, providing better quality level and increasing customer service. It will also reduce the investment in inventory. By developing a flexible manufacturing, company can also reduce the investment in inventories. To minimize the inventory and increase customer satisfaction, many companies are adopting flexible manufacturing (Sage, N.D.). Recommendations for Restructuring the Purchasing and Inventory Functions Brisbane Outdoor Power Centre is good and trustworthy company among the customers. Customers are very happy with its products and services such as after sales service, and they considers one of the best industry in the market. The company is straight forward in its dealings. But when the owner of the company Ms. Green visited in all three branches of the company, she found that there is lots of scope of improvement in the companys purchasing and inventory management. Some of the recommendations are given below for the improvement in the inventory management. The recommendations are in the form of action plan which will help to improve the inventory management: There should be automated data collection of required inventory in the company. Automated data collection system will automatically collect and record the data related to the required item. This system will be more affordable and cost effective for the company. There should be transaction based movement of the inventory so that company will be able to maintain the record of the flow of inventories. All members in the inventory management should be present there at the time of arrival of the inventory. This will reduce the time of the employees. Company should have the information of the count of inventories available for the production. Team of inventory management should manually update the inventory. It will help to cross check the available inventory at any time. Team of inventory management should store and update the important documents in proper manner on time to time because if there is a need of data of particular inventory, it can be find out easily. Company should maintain the right level of inventory because excess of inventory can be the cause of wastage of money and space. It includes a re-order point and arrange safety stock of the inventory (Robinson, 2015). Conclusion The report was about the current purchasing and inventory management processes of the company Brisbane Outdoor Power Centre. From the above discussion it can be seen that proper and efficient inventory management process is an important part of any company. By adopting purchasing and inventory management process company can do better use of inventory and raw material in the business. Although organization the raw material and inventories into the production process is a complex process for the company but Brisbane Outdoor Power Centre gets competitive advantage by the effective and proper purchasing and inventory process in the market. Company is achieving competitive advantage with its main resources such as physical resources, human resources and organizational resources which the competitors do not have. One of the drawbacks of inventory management process is that if the purchasing and inventory management process does not implemented correctly, it will show impact on the reputati on of the company in the market. Further, company can become competitive when more inventory management practices are used by the company so, there should be a backup plan in the company in the case of failure of the system. Company should not maintain too much inventory in the business. It will be cost consuming for the company. By concluding, it can be seen that Brisbane Outdoor Power Centre is doing well in the market but still needs some improvements in inventory related area. For the improvements, recommendations are provided in the report. References Arndt, H., (2008). Supply Chain Management. Germany: Gabler Verlag Chase, (2006). Operations Management for Competitive Advantage. NY: Tata McGraw-Hill Education Donovan, M., (N.D). Reduce inventories and improve business performance. Retrieved on 14th September from https://www.reliableplant.com/Read/141/reduce-inventories Hussey, D.E., (2007). Strategic Management: From Theory to Implementation. UK: Taylor Francis JOSEPH, L., (2014). Inventory Management Techniques and Their Importance. Retrieved on 14th September from https://blog.udemy.com/inventory-management-techniques/ Levi, E.M., (2013). The Most Important Concept in Supply Chain Management. Retrieved on 14th September from https://www.opsrules.com/supply-chain-optimization-blog/bid/319193/The-Most-Important-Concept-in-Supply-Chain-Management Muller, M., (2011). Essentials of Inventory Management. USA: AMACOM Div American Mgmt Assn Outdoorpowercentr, (2016). Retrieved on 14th September from https://outdoorpowercentre.com/ Pontius, N., (2016). 19 Inventory Management Experts Reveal the Single Most Effective Strategy Companies Can Use to Reduce Inventory Costs. Retrieved on 14th September from https://www.camcode.com/asset-tags/inventory-management-techniques-to-reduce-inventory-costs/ Robinson, A., (2015). Strategic Logistics: 8 Steps to Controlling Inventory Flow Driving Warehouse Efficiency. Retrieved on 14th September from https://cerasis.com/2015/11/03/inventory-flow/ Sage, (N.D.). Better Inventory Management. Retrieved on 14th September from https://www.sage.com/na/~/media/site/erp/responsive/resources/Sage_ERP_Better_Inventory_Management_wp.pdf Toomey, J., (2012). Inventory Management: Principles, Concepts and Techniques. Germany: Springer Science Business Media Tsang, R.,(2011). Ten ways to improve inventory management. Retrieved on 14th September from https://www.bain.com/publications/articles/ten-ways-to-improve-your-inventory-management-wsj.aspx Waller, M. A., Esper, T.L., (2014). Introduction to Inventory Management: Principles and Strategies for the Efficient Flow of Inventory across the Supply Chain. Retrieved on 14th September from https://www.informit.com/articles/article.aspx?p=2192703seqNum=2