Inventory Management Is an Important Process of a Successful Business - Coursework Example

? C20 Fireplace C20 Fireplace Inventory management is an important process of a successful business (Gardner 2004). C20 Fireplace inventory consists of raw materials and finished products. Each of these two elements translates into money for the company. The company manages its inventory through an inventory record keeping system. The system is basically used to evaluate the company costs of goods sold and to offer information for financial statements. The record keeping system shows the number of items the company has in stock at a particular time. This information is usually relevant for the company because it enables it to reorder and maintain enough stock quantities to meet the customers demand. The inventory that the company has in stock is calculated at the end of every month. The inventory management process in C20 is not limited to documenting raw materials and the distribution of the raw materials into production process. Raw materials movement through the different steps, the operational stages is covered. Tracking the raw materials as they are used to generate fireplaces assists the company in identifying the need to alter order amounts so that the raw materials records does not get riskily small or it is overstated to a point that is unfavorable. The company also keeps records of finished goods that are displayed in the showrooms. This means that the company posts the newly produced fireplaces to the inventory totals and it also subtracts the goods sold. One of the components of C20 inventory is the tiles stock. There are different tiles that are used by the company in making fireplaces. These are quarry tiles, grazed tiles 6”, glazed tiles 4”, 6”?2” tiles, kerb tiles, and biscuit tiles. Under each and every type of tile, there are different subtypes of tiles. For instance, under the quarry tiles, there are black, black (seconds), and red tiles. Under glazed tiles 6”, there are B.Black, V. Green, 942, V. Blue, Burgandy, Mid Blue, Ivory, St. Green, T. Pot Brown, V. Brown and Inca.Gold. The quantity, unit, unit value, and total value of the sub types are then calculated and sub totals of the tiles offered. The table below shows the quantity, unit, unit value, and total value for biscuit tile Quantity Unit Unit value Total Value Item Description Biscuit Tiles 6”?2” 10 sq yard ?22.00 ?220.00 4” ? 4” 13 sq yard ?17.00 ?221.00 6?2 openings 375 Pieces ?0.55 ?206.25 4?4 openings 800 Pieces ?0.55 ?440.00 Hand Cast openings 150 Pieces ?0.55 ?82.50 The old stock total value is also added to the total values of the tiles in the inventory. The inventory records also have the original unrestored stocks. These are fireplaces that are either removed from houses being demolished or renovated, or which are simply bought from owners. Under the original unrestored stocks, there are sub-categories such as original wood mantles, original C.I. fireplaces, and original stoves. The sub-categories quantities, unit value, and their total value is calculated. The company inventory also has the engineering stocks such as mica, fire ropes; cement (Fire), Discs, W/Rods and Nuts and Bolts. The engineering stocks quantity, unit, unit value and total value of the sub types are then calculated and sub totals of the tiles calculated. The next item in the company inventory is the slabbing supplies. These supplies consist of steel reinforcement, slablyte, fondu, snowcrite, cast plaster, glue, fire rope, glazes, and sand. The quantity, unit, unit value, and total value of the supplies are then calculated and sub totals of the supplies offered. The other items in the inventory are fire accessories, new wood pellet stock, safety wear, blunger, and display stock. The quantity, unit, unit value, and total value of these items is calculated and their sub-totals offered. The tiles subtotal, original unrestored subtotal, engineering stock subtotal, slabbing sub total, fire accessories subtotal, safety wear subtotal, blunger sub total, and display subtotal are added up to give the total of the inventory. The relevant operations management concepts applicable in this case are Keizan or Continuous Improvement and Total Quality Management, and Total Quality Management (TQM) comprises of all activities through which the expectations and the needs of the clients, and community and the objectives of a company are satisfied in the most proficient and cost effective way through maximizing the potential of all workers in a continuing drive for improvement (Narasimhan & Kannan 2011). This concept lays emphasis on the organization and planning features, which are important to the process of quality improvement. In order for C20 to compete within its business environment, there is need for a lasting approach for TQM, which should be integrated with the other strategies. To ensure the success of TQM process, quality procedures, and systems have to be used effectively as they are important to the running of the system. Poor quality costs any organization in terms of reduced profits and also loss of future market share whereas good quality offers the company a definite competitive advantage. In C20, quality is one of the important categories in this product because fireplace needs a highly secure product in order to resist the heat safely. C20’s uses cast iron hood, tiles, and cement in order to renovate and make fireplace. Nonetheless, the company is facing challenges when it comes to quality of the product. It has had difficulties introducing to the UK a fireplace that is largely functional as opposed to decorative. This shows that there is still room for improvement even if the company has a long experience in the fireplace field. A quality product usually conforms to the customers’ satisfaction. There are two types of product quality- conformance quality and design quality (Meirovich 2006). Design quality evaluates the product functionality whereas quality of performance evaluates how closely product matches the intention of the design. In UK, the fireplace designs do not match the intention of the design. People are not satisfied with the fireplaces because they view them as decorative rather than functional. One of the principles of TQM is making a product right the first time (Business Excellence n.d). C20 has achieved this to a large extent; however there are still markets that are functional rather than decorative fireplaces. Implementing a successful TQM program will reduce costs rather than increase them. Better quality will result in better productivity. C20 can improve the design of the fireplace to suit all people needs. It should focus on other designs so that it can improve its performance. The TQM features checklist comprise of an organized approach of improving goods as well as services; a planned way of spotting and solving problems; a lasting process of controlling quality; a procedure supported by the action and statistical control of the management and: a technique practiced by all people. The TQM concept thus provides C20 with a systematic way of improving its fireplaces and all the other benefits listed in the checklist. One element of TQM is ‘a focus on customer’. C20 has local and international customers. Managers and employees should be customer focused so that they can continually discover new ways of meeting or exceeding the customer expectations. There should be no customers who are not satisfied with the company products because the company would offer a wide range of quality fire places. Quality gets customer orders and meets the needs and expectations of the customers; this is the strategic objective of TQM (Samad 2011). C20 needs to make a long term commitment to improving quality. The achievement of quality standards is not however restricted to the production of fireplaces. It extends to all parts of business from the conceptual design to marketing, from order processing and distribution. A quality product ranks high against all the criteria which sophisticated customers nowadays use to evaluate the things that they buy. All the parties in the company had to be motivated so as to produce high quality goods. The quality of services is negatively affected by lack of preparation equipment which delays the product making when fireplaces are in demand during the cold seasons. The breakdown of equipments is also common especially in season time with high demand of fireplace. This means that orders are delayed and this has a negative impact on quality. The dependability of the equipments is limited and this directly impacts on the company profitability. The negative effects on profits results from service of less that acceptable quality and ineffective quality management. The quality problems in C20 are caused by factors which management has control. The management should continually seek improvement through sound quality management which is a trilogy of quality planning, control and improvement. TQM will ensure fitness for use, including reliability, conformance and maintenance. Continuous Improvement or Kaizen refer to the culture of sustained continuous improvement focusing on eliminating waste in all processes and systems of an organization. This strategy begins and ends with people. The leadership has to be involved so that it can guide people to continuously improve their aptitude to meet expectations of high quality, low costs and on time deliver (Schermerhorn, Hunt & Osborn 2004). C20 can develop its systems through Kaizen activity in areas of cost, quality, speed, flexibility and dependability. Kaizen has two elements namely ‘change or improvement for the better’ and ‘ongoing/continuity’. C20 business activities need to be improved and this can be achieved through continuous improvement or Kaizen activities. The important areas that need continuous improvement are cost, quality, dependability, speed and flexibility. In C20, quality is one of the most important categories because the company needs to upgrade the fireplaces regularly to compete effectively with the other organizations in the same business. Although the company has long experience in this field, there is need for continuous improvement to ensure that the company does not lose its market position. The company needs to endlessly pursue improvement of raw materials, machines, labor use and the production methods through applying the ideas and suggestions of the employees (Slack & Lewis 2008). There is need for the participation of all of the company employees from the senior management to the junior employees. The main elements, which are important to the process of Kaizen are quality, effort, and involvement of all workers, communication and also the willingness to change (Shingo 2008). C20 also needs to improve its product distribution process. This would eliminate waste in the distribution process of the organization. The company would thus benefit from a reliable and effective distribution. The company uses a conventional and traditional method and it also lacks tile making machines. This causes problems with reliability. C20 can improve its distribution system efficiency and effectiveness. The factory also has a shortage of machines like clay mixer machine and glazing kiln. Tiles loaded in to glazing kiln do not go to the next process until they take tiles in the next day and leave them on the bench for a week until they dray. This is only one process and it takes long time. This is another area that needs to be improved. One easy way for improving an organization’s processes was defined by Shewhart cycle of Plan, Do, Check and Act (Greasley 2009). This cycle would systematize continued perfection and generate results that are easily assessable. In ‘plan’ process there is need to study the process so as to try and establish where the company is; the people involved; data that is relevant for improvement process and; possibilities for improvement. This is followed by developing a plan. The ‘Do’ process entails trying out numerous possibilities for change according to the likeliness of success. C20 has to be obligated to offering every improvement plan an honest endeavor and evaluating neutrality. The ‘check’ stage entails measuring the effects of the amends against the baseline that is set in the ‘plan’ stage. If the change cannot be quantified, the company should enquire the customers’ views about the change in preference to the earlier process. In the ‘act’ stage, changes that work is implemented, if not, the company should try another option and then repeat the cycle. 1. Plan; 4. Act 2. Do; 5. To try again or repeat with new information or 3. Check; 6. Use another process (6-9) with the information at hand C20 should not accept that the present way of doing things is necessarily the best. There are deficiencies in production and distribution processes and furthermore with the current technological advances, the company can improve its raw materials, processes and machinery further. The company has to make small improvements, checking for mistakes in the processes as it progresses. It has to get to the real cause of the problem and use ideas from various people to come up with new ways of doing things. The company has to realize that improvements do not know any limit; it has to get in the habit of always looking for better way of doing things. By implementing the two operations management concept- continuous and total quality management- a greater emphasis on future planning and success will be placed on the company and increasing customer loyalty and workers morale, consequently enabling the company, the customers and the employees to have the satisfaction element. References Gardner, R 2004, The Process-focused Organization: A Transitional Strategy for Success, American Society for Quality, Quality Press Greasley, A 2009, Operations Management, 2ed. Hoboken, New Jersey, John Wiley & Sons. Meirovich, G 2006, ‘Quality of Design and Quality of Conformance: Contingency and Synergistic Approaches’ Total Quality Management & Business Excellence, vol. 17, no. 2, pp. 205-219 Narasimhan, S & Kannan, V 2011, ‘Total Quality Management as the Foundation of Sustainability-Turning a New Leaf’, European Journal of Social Science, vol. 24, no. 3, pp. 444-451 Samad, S 2011, ‘The Contribution of Quality Management System on Quality of Product and Organizational Performance in Malaysian Logistics Companies’, European Journal of Social Sciences, vol. 25, no. 1, pp. 66-77. Schermerhorn, J, Hunt, J & Osborn, R 2004, Core Concepts of Organizational Behavior, Hoboken, New Jersey, John Wiley & Sons. Shingo, S 2008, Kaizen and the Art of Creative Thinking, Norman, Bodek. Slack, N & Lewis, M 2008, Operations Strategy, 2nd ed, Pearson Education Ltd, Harlow. Business Excellence n.d, What Is Total Quality Management, Viewed 17 January 2012, Read More