Improving Inventory Availability and Service Reliability - Research Paper Example

Improving Inventory Availability and service Reliability Table of Contents ITEM PAGE # Introduction and Literature Review 2 Aims and Objectives 4 Methodology 5 Data Collection and analysis techniques 6 Ethics and safety considerations 6 Schedule 7 Bibliography Introduction Today’s businesses, particularly manufacturers of certain consumer and industrial goods, are being compelled to rethink how they operate their after-sale departments. This retrofitting has led to a new outlook in the forecasting of distributor and end user need. Moreover, these companies that are now driven by implementing better logistics and business information needs, have come to the realization that their after sale departments can effectively be transformed into viable profit making centers. “…Turning service into a growing profit center requires a shift in focus. Everything a company provides after the sale  --  spare parts replacement, professional services, help desks, warehousing, product recalls, and field technicians, among others  --  needs to be managed as an integrated whole”(Green) "…A company that institutes a first-rate service management capability can increase its service revenues between 10 percent and 20 percent”(Green) "Moreover, by making its service functions more efficient, a company can reduce operating expenses by 15 percent to 30 percent”(Green) Customers (distributors) and end users (consumers), do not relish the thought of extended time delays in the acquisition of parts and service. In almost all instances, downtime translates into either money or opportunity loss. Additionally, "the cost of nonconformance can be a big issue. With service parts logistics, you often deal with customers who are already angry or upset." Such customers may have less tolerance for error so "you have to be that much better when you deliver the part to the customer."  "There's a lot of emotional content with service parts”(Harps 2002). Whenever a company fails to accommodate previously agreed upon service commitments it can be costly, "Some companies are assessed penalties if they don't service the equipment fast enough”(Harps 2002)   While distributors have a particular set of circumstances which they must adher; the availability of shelf inventory of a particular item may prove critical in the chain of events which enables one to suppress downtime. “…Subaru New England (SNE), an independent distributor for Subaru automobiles and service parts, struggled with inventory. Several years ago, the company was carrying $14 million in parts, but providing a same-day fill rate of just 70 percent at its parts distribution center”(Harrington 2005). The business reality is that the distributor operates on an economy of scale, which stipulates that the distributor will make an attempt to only inventory those parts which are in high demand. In other words, inventory carrying cost must be balanced against supply chain cost. In the case of Subaru, their system" couldn't look at the entire country and makeparts demand forecasts, and it couldn't plan distribution to locate parts near the customer”(Harrington 2005). “…Based on demand analysis, Subaru New England was able to cut inventory down to $6 million and, at the same time, improve same-day order fill to its 62 dealer customers to 98 percent”(Harrington 2005). Aims and Objectives This research is based on the premise, that when the proper logistics and information systems are an integral part of the operational paradigm, that downtime for the end user will be minimized. The research will show that spare parts logistics has proven to be a key component to the overall effectiveness of spare parts inventories and a key profit lever to a business’ operation. Service parts logistics differ from raw material and product logistics in a number of ways. "…The primary difference is that service parts logistics deals with supporting a product after it has been sold, "Supply chain logistics typically uses just-in-time methodology, with the goal of minimizing investment in inventory and transportation costs. With service parts, it's more just-in-case. Companies have to own service parts inventory like an insurance policy, in case the equipment goes down”(Harps 2002). Methodology I will use two modes of research; the secondary research will consist of a literature review, which will be gathered from an assortment of sources; this information will feature theories and actual case studies, which have produced varying levels of success in mitigating logistical and information challenges, which pose financial and operational constraints in supply and demand produced by distributors and end users.  The primary research will be conducted through the formulation of a short questionnaire, which will be formulated to gauge the two types of demand; independent and dependent. To assess which of the two types presents the greater challenge to a companys’ logistic and information system. The sample will consist of two companies ; one of the companies in the sample will be faced with attempting to address the challenge of dealing with their logistic and information systems in meeting the needs of their client distributor base, and the second company will be one who is currently applying a new system to face the challenge of improving inventory availability and service reliability. It is a goal to obtain before and after data which will enable a reliable assessment and evaluation. If course, with one company, there will not be any before and after information or data, as a consequence, the questionnaire will be structured to address those inequalities which contribute to the operation not adequately meeting the demands being placed upon it. It is conceivable, that two separate questionnaires will be formulated. Data collection and analysis techniques The data will be collected using a two questionnaires; one questionnaire will accommodate a company which has not improved or retrofitted their inventory availability and service reliability logistics and information systems, and the other will address a company which has done so. Since this accommodation towards participation is gratis, and because time may be a special issue with the prospective respondents, they will be requested to accomplish the questionnaires at their convenience, versus my conducting a face to face interview. Once the data is collected and collated, I will do a comparative analysis of the two companies systems. Ethics and safety considerations The targeted respondent companies will be contacted via a letter, explaining the purpose of the research, with assurances that this project is geared specifically for the satisfaction of course requirements, and will not be used for any other purposes. I will also indicate that any information gathered from the questionnaire, will be attributed to the company, and its designated spokesperson. The point of contact at each company will be with someone in operations, or a department to be specifically designated by the company representative. Prior to contacting the companies which I will select to be the respondents, I will seek to obtain a letter of certification from the department, verifying the veracity of purpose for the sought after research. I deem this critical to allay all fears and suspicions which the companies might initially harbor on the legitimacy of my stated purpose. Schedule MAY JUNE JULY AUGUST SEPT OCT NOV DEC MAY MEETINGS WITH SUPERVISOR FOR //////////////////// /////////////// /////////////// /////////////// ////////////// /////////////// /////////////// ////////////// CRITICAL ANALYSIS /////////////// /////////////// /////////////// /////////////// /////////////// /////////////// /////////////// /////////////// INTRODUCTION AND LITERATURE /////////////// /////////////// /////////////// REVIEW /////////////// /////////////// /////////////// RESEARCH METHODOLOGY /////////////// /////////////// DATA COLLECTION /////////////// /////////////// ANALYSIS OF FINDINGS /////////////// /////////////// CONCLUSIONS AND RECCOMMDATIONS /////////////// /////////////// MODIFICATIONS TO PRESENTATION /////////////// WORD PROCESSING, BINDING & SUBMISSION /////////////// ///////////////   Bibliography Green WD, Systems Integration, Accenture Accessed on line May 12, 2008, at www.accenture.com Harps,LH (2002), Service Parts Logistics; Taking it outside: Companies outsource service parts logistics to focus on their core competencies Accessed on line May 12, 2008, at www.inboundlogistics.com Harrington, L (2005), from cost to profit: service port logistics Accessed on line May 12, 2008, at www.inboundlogistics.com Read More