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A Case study on Champion electric - Essay Example

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Necessary inventory is essential when they meet the needs of customers, due to demand or supply, hence referred to as buffer stock. The management concern on the high inventory was as result of the unnecessary products that needed to be dusted off as they were less purchased or not purchased at all by customers…
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A Case study on Champion electric
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Download file to see previous pages In addition, the management declared that it already had profitable products, as well as buffer stock. The high inventory levels accumulated pace for the piddy items that were necessary, yet the company did not have any. When a customer ordered a product that was not available, the company had to re-order it, thus wasting a lot of time for the customer.
The balancing of too much inventory that may lead to high costs and few inventories that may yield to loss of sales is the main concern for this management. Nevertheless, a firm holds inventory with an aim of reducing costs and in order to improve customer service. The management of champion electric is concerned with the need of meeting customers’ demands, thus the need for high level of stocks. In this case, they will not loose out on sale due to lack of a product. In addition, bulk buying reduces cost incurred as manufacturers grant a fare price for the bulk buying, hence a company is guaranteed of making profits once it has bought goods at a fair price.
However, some goods tend to be irrelevant, as they are remodeled by manufactures, thus, customers request for the latest model of a product. Moreover, Champion Electric lacks the latest products, as its records indicate almost a 100% in stock.
Barb is given the task of getting rid of the less purchased products in order to create space for new products. A disadvantage arises here, in that, a cost is incurred in terms of storage, and when these products become outdated, the company loses money. Nevertheless, high levels of inventory may mean higher sale if the products’ prices rise, and also decrease the risk of fall in supply in the future. According to Hobbs Dennis (p.59), high inventory levels lead to high overhead costs, the stock requires a lot of space, which leads to overhead costs; therefore, it is important for Barb to introduce inventory management. The main fear of too high inventory is that it may yield to idle stock that is not purchased, which counts as a loss in any business, as the stock does not yield any returns. What would you suggest to Barb as steps to take in addressing the concerns of president Campos? The level of inventories is mainly affected by demand, uncertainty, and the supply chain flexibility. Competitive advantage cannot be achieved by only high inventory levels; however, the ability to manage supply chain is necessary. Effective inventory management ensures that a company maintains an ideal level of product; as it acts as a key to attaining a competitive advantage for any business, such that, management and control of inventory may yield to customer satisfaction and profitability of a firm (Toomey, p.1). First, Barb should collect accurate data on the number of inventories available in the store, which also involves keen observation on the number of stocks leaving and entering the stores. Accurate entries on every stock receipts should also be considered; however, though inventory management may seem expensive, it assists in monitoring the flow in and out of goods. Inventory management is important to any firm, in that, it influences supply and demand of a product. In the champion electric case, some customers demand for products which the company has run out of; however, this may ...Download file to see next pagesRead More
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