Parts Emporium, a Distributor in Automobile Parts Segment - Case Study Example

The paper "Parts Emporium, a Distributor in Automobile Parts Segment" is a perfect example of a case study on business. Parts Emporium is a distributor, which deals in the whole selling of automobile parts. Dan Block and Ed Spriggs formed this firm together in the year 1973. This firm was situated in the “Block’s garage” and initially witnessed a slow response. However, the firm was successful to gain a stable growth in the year 1976, when it was shifted to another location for convenience and expansion. In the new location of Chicago, the firm was able to manage an expanded inventory storage space, which helped it in introducing new lines of product, resulting in extensive growth of the auto parts business. Henceforth, Parts Emporium became the leading distributor in the auto parts segment of the North Central province (Bregman, n.d).

 Analysis of the Problem

With the increase in its business, Sue McCaskey was appointed as the material manager in Part Emporium firm, following which, many problems cropped up in the form of lack of sufficient information, hindered the flow of inventory, lack of coordination and similar others. The first and foremost challenge was the lack of information available to her to give a view on accurate inventory details from the purchasing manager and the concerned staff members. This hampered the process and the ability of the management in taking corrective measures (Bregman, n.d).

Moreover, adequate data regarding inventory, from any reliable sources were also observed to be unavailable within the organization although the staff members confirmed that they regularly count the inventory and that the data is accurate (Bregman, n.d). This occurrence also raised substantial doubt about employee commitment and efficiency. Apparently, the mismanagement of the inventory has also disrupted customer services committed by the organization (Bregman, n.d).

Undoubtedly, keeping a proper record of the inventory is essential that would lead to consistency in the overall deliverance of the materials, as per the demand of the customers. However, a degree of negligence in maintaining records is identifiable in Parts Emporium that might mislead the company with inappropriate information about inventory and stock warehousing. It then becomes difficult to compete in the business market as materials are to be procured with high costs from stockists in comparison to inventory costs (Bregman, n.d). In addition, it is also important for Parts Emporium to develop cooperative behavior between all hierarchy levels to maintain a better flow of information. This will also help in having an efficient process of maintaining inventory and thereby, sufficing the demand of customers (Bregman, n.d).

The point of view relevant to this problem belongs to shareholders of the firm including employees, dealers, the board of directors and the owner of the firm. Considering the current state of the situation, the stakeholders may focus on restructuring the firm internally as well as externally (Bregman, n.d). If this problem gets solved, there will be some positive implications whereby the cost of warehouse expenditures is expected to decrease substantially. However, if this problem is not resolved, the company shall have to witness a steep decline in its financial and market sustainability within a short-term tenure (Bregman, n.d).

The potential alternative solutions to resolve the problem is to build effective and accurate Performance Management Appraisal (PMS) that would motivate the employees, make them more committed to their work and increase their efficiency (Bregman, n.d). The best solution would be to rebuild the infrastructure of the warehousing and recruit section-wise employees to check and manage the inventory records with accuracy (Bregman, n.d).

 Conclusions and Recommendations

There are various costs associated with the management of the firms, which include the ordering costs, holding costs and similar others. On this note, considering the best solution to rebuild the inventory management infrastructure of Parts Emporium, it is recommended that the firm should intend to reduce the stock-outs, as it is more expensive than holding costs of the inventory. As per the analysis, it is evident that lesser will be the ordering cost, higher will be the profit. Moreover, the demand will be affected by the rise in the cost. Therefore, the demand must be maintained at a marginal level and holding stocks must be reduced. As per the analysis, it can be stated that with the new order system, the firm will be able to save 310USD and enhance its profit altogether.