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According to the case study, Brisbane Outdoor Power Centre has three different retail locations in Queensland. The retail centres offer different product mixes which are designed to meet local demand. The owner Donald Saxon opened his first outlet in Mt Gravatt, purchased the Strathpine centre and Ipswich store in the years 1985, 2001 and 2004 respectively. As both the acquisitions were a going concern, the staffs were experienced and there was hardly any discrepancy in operations. The three people responsible to look after the operations were Donald Saxon, Belinda green and Adam Conte for Mt Gravatt, Strathpine and Ipswich respectively. The owners Donald Saxon and Louise Saxon decided to retire and Belinda looked at it as an opportunity to buy the business. She went on a tour of observing the three retail operations and found out that all three had different organizational cultures and values. She noticed that purchasing and inventory management needed to be reconciled as there were three different systems had unconnected purchasing and inventory management systems. The aim of this report is to analyze the current processes followed by the company. The inventory concepts are assessed and recommendations are made to enhance the operations.
According to the case study, Brisbane Outdoor Power Centre has three retail centres with different organizational cultures and inventory and purchasing systems. When Belinda decided to buy the business, she took a tour around the three centres and observed that improvements need to be made in the purchasing and inventory management systems. It was observed that the centres follow a laissez faire approach in which the central authority plays a minimum role (Zareen, Razzaq, & Mujtaba, 2014). It was seen that Saxon had a fairly loose and decentralized method of operation which enabled the employees to make decisions. Saxon had faith in his branch managers that they would put the interests of the organization first (Skogstad et al., 2014). According to the case study, all the three stores operated autonomously which resulted in odd purchasing and inventory management. It was noted that in times of shortage, various stock items were transported between the stores, but no integrated approach was followed. All the stores had different products and brands. All the three managers had their own sourcing and purchasing patterns and managed inventory in their chosen manner.
The Mt Gravatt store of Brisbane Outdoor Power Centre follows Laissez-Faire approach in which there is very little guidance from the managers. There is complete freedom to the employees or followers to make decisions. The managers provide the tools and resources as required. The group members or teams in the organization are expected to solve issues that arise on their own. The managers may take responsibility for group decisions and actions, but the power is handed to the employees (Inderfurth & Vogelgesang, 2013). As Brisbane Outdoor is a retail establishment, it requires heavy investment in stock and effective procedures for managing investment. As the case study states that there are cases of shortage of inventory. This means that there is no safety stock in the retail centres that buffers against uncertainty. Safety stock can be defined as the stock held by a company to guard against stock-out (Zareen, Razzaq, & Mujtaba, 2014). According to the Pareto analysis conducted by Belinda, it was suggested that the procurement and inventory management processes improvement shall result in substantial and immediate operational gains.
According to the case study, the Laissez-Faire approach is followed. In this case, there is autonomy among the employees to make decisions. It is argued that the laissez-faire leadership style is suitable for the people who possess strong skills, experience and extensive education (Furtner, Baldegger, & Rauthmann, 2013). It was noted by Saxon that as the organizations bought were a going concern, the staffs were highly skilled. However, the laissez-faire operational pattern may fail if the team members do not feel valued by their leader. As the group members in the organization are experts, they possess adequate knowledge of operations and can capable of accomplishing tasks with very little guidance (Yang, 2015). The style is effective in cases where the group members are more knowledgeable than the group leader. The followers can demonstrate their deep knowledge and skill surrounding the particular areas. The autonomy helps in making the employees feel more satisfied with their work (Wong & Giessner, 2015).
However, it is argued that the laissez-based approach may not be suitable when the employees are not able to set their own deadlines and solve issues. There may be poorly defined roles within the group and there may be lack of cohesiveness. For example, in the given case scenario, it is observed that Brisbane Outdoor Power Centre faces stock shortage. This implies that there is stock shortage due to ineffective operations (Skogstad et al., 2014). No safety stock is kept by the management. As there is autonomy, the employees have not made the required order placement due to which the inventory has shortage. As the organization is a retail management, there is a requirement for heavy stock investment. The mismatched Laissez-faire approach results in lack of accountability that may lead to failures of group performance. The performance in the organization may be low (Wong & Giessner, 2015).
It is further argued that keeping safety stock shall help in protecting against unforeseen variation in demand or supply. If the safety stock is kept and there is integration in the inventory model, the disruptions in manufacturing and operations could be prevented. Therefore, the current stock processes have discrepancy and needs improvement. Whether the laissez-faire leader is a CEO, department director or group manager, he or she expects positive results (Graves & Schoenmeyr, 2016).
A few supply-chain and inventory management concepts can be applied by Brisbane Outdoor Power Centre for improving organizational efficiency, reducing investment and maintaining adequate stock levels.
Lean Production- Lean manufacturing or production is a systematic method in which the waste is eliminated within a manufacturing system. The lean production system also empowers the workers (Chen, Cheng, & Huang, 2013). The wasteful steps can be eliminated and efficiencies can be enhanced. The quality of products need not be reduced with lean manufacturing systems, but better ways must be found for accomplishing the same tasks (Hofer, Eroglu, & Hofer, 2012).
Safety Stock- Buffer stock or safety stock can be kept in the organization for mitigation the risk of stock-out or shortage. There have been cases of shortage of stock in the organization which makes it necessary for the company to keep safety stock. Safety stock shall ensure additional quantity of an item which would reduce the risk of items being out of stock. Safety stock can be used as a strategic tool till the employees of the company can judge the accuracy of their demand forecast (Croson, Donohue, & Sterman, 2013).
Total Quality Management- It is an approach to ensure long-term customer satisfaction as it involves the act of looking at the activities and tasks which help in maintaining a level of excellence (Zehir et al., 2012). Total quality management is a tool that challenges quantified goals and benchmarks. The continuous improvement processes is not only necessary to improve results but also to improve capabilities for a better organizational future (Gimenez-Espin et al., 2013).
Six Sigma- The six-sigma methodology can be adopted as a set of tools and techniques for process improvement (Antony, Rodgers, & Gijo, 2016). It is a data-driven approach to eliminate bottlenecks or defects in the entire processes from the start till the end. The defects can be defined as anything which is outside the specifications (Mast & Lokkerbol, 2012).
Software solutions and SCM- Brisbane Outdoor Power Centre can employ software solutions to manage the supply chain effectively. The enterprise resource planning (ERP) is a suite of integrated application that shall help in collecting, managing and interpreting data from various business activities (Tsai, Lee, & Lin, 2012). As Brisbane Outdoor has three different retail centres and the purchasing and inventory system is not connected, ERP shall help in managing back office functions in an integrated manner (Hoch & Dulebohn, 2013).
Business Process Re-engineering- It is a dramatic change initiative that can be can help in redesigning of workflows between the enterprises. Brisbane Outdoor can implement information technology functions for optimizing end-to-end processes. Internet can also be used for communicating the inventory status of one retail store to another (Slack & Lewis, 2008).
Brisbane Outdoor Power Centre can implement a few steps that shall ensure effectiveness of the purchase and inventory management. Firstly, the lead times of materials must be reduced. The Pareto ABC analysis can be used to determine the materials which are used frequently and have maximum consumption. The non-moving inventory or obsolete stock must be identified and reviewed on a monthly basis. The liquidation plan must be implemented for preventing obsolesce and minimizing inventory. The inventory accuracy must be maintained at the warehouse by comparing the physical and enterprise resource. The inventory visibility and availability of the materials must be improved. The demand forecasting mechanism must be improved so that the market demand can be met.
The demand pull system must be used instead of push system as it would reduce the risk of obsolete stock. The safety stock policies must be reconciled. It is necessary for Green to integrate the inventory management of all the three retail centres so that the inventory can be managed effectively. Green can appoint a manager or redefine the existing manager’s roles and responsibilities. Green must maintain accurate inventory records. A year-end or periodic physical count of inventory helps uncover the potential difference between the amount of actual inventory available and the amount of inventory recorded in the inventory account.
The above report enlists the key issues faced by Brisbane Outdoor Power Centre. The three people responsible to look after the operations were Donald Saxon, Belinda green and Adam Conte for Mt Gravatt, Strathpine and Ipswich respectively. Green noticed that purchasing and inventory management needed to be reconciled as there were three different systems had unconnected purchasing and inventory management systems. The inventory concepts are assessed and recommendations are made to enhance the operations. It was noted that in times of shortage, various stock items were transported between the stores, but no integrated approach was followed. As Brisbane Outdoor is a retail establishment, it requires heavy investment in stock and effective procedures for managing investment. It was noted by Saxon that as the organizations bought were a going concern, the staffs were highly skilled. No safety stock is kept by the management. If the safety stock is kept and there is integration in the inventory model, the disruptions in manufacturing and operations could be prevented.
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