BSBCRT511 Develop Critical Thinking in Others

Introduction:      

It takes a lot of effort and time to operate a business. Owners of small businesses are in charge of all elements of their operation. The coordination and alignment of numerous activities in an organisation are generally characterised as management. Owners of businesses utilise management skills to achieve their business objectives as well as goals. Management of small businesses necessitates the application of a combination of knowledge, education and skill by business owners. It also necessitates the control of various business operations by the owner(Scarborough 2016). The paper aims to critically analyse the case study and suggest realistic and rational solutions to the case.

Discussion:

(1) The underlying issue is the mishandling of inventory levels on the site. The firm does not have the appropriate inventory levels on hand to avoid manufacturing outages.

Inventory management is quite complicated. The following are some solutions to typical inventory management problems:

1. a) Transparent Performance: Measuring as well as reporting facility performance indicators such as inventory turnover, order processing and customer satisfaction speed in order to eliminate warehouse redundancies. It is advantageous to share this information with employees and suppliers.
2. b) Forecasting the demand: Demand forecasting tools are available on several inventory management platforms. This tool interacts with sales and accounting data to assist businesses in forecasting demand as well as scheduling orders on the basis of changing client preferences, material availability, or seasonal trends.
3. c) Maintaining a safety stock to compensate for supply chain interruptions and to assist manage rising lead times as a result of shifting worldwide competition for raw commodities is another solution. Effective stock planning aids businesses in adapting to changing global supply networks(Storey 2016).

(2) The suppliers that provide the raw material must be contacted. If levels of inventory exceed the threshold point when ordering is required, then contact one of the vendors to ensure that the material is delivered on time. It's preferable to utilise a point-of-sale or inventory system that automatically adjusts inventory levels as sales are rung up, so owners don't have to bother about updating their database manually. Grouping the inventory into priority categories may help owners understand which goods they need on a top priority basis to order more of and more routinely, and which are vital to the business but maybe more expensive and carry more weight. Experts recommend categorising inventory into three groupings. The first one being the items of high-ticket that the business will not require often; the third one being low-costing items and the second being a combination of the two(Ferro and Gomes 2019).

(3) If ready material is necessary, the only alternative available to save time is to purchase the material at a greater price. If inventory levels are not managed and maintained, the material will be accessible to manufacture and produce the items. In order to avoid these, proper inventory management needs to be implemented at the earliest. Ordering items at a higher cost is a business loss, especially for a small business trying to expand the business. If there are any issues in managing the inventory, these problems should be communicated to the owner on a regular basis to save time and chaos(Nemtajela and Mbohwa 2017).

(4) It will begin manufacturing, and requests for customised notebooks will be met on time by ordering more expensive raw materials. Not managing inventory leads to:

1. a) Cost Increases:

Spending needless funds on products that will not benefit the firm.

1. b) Inventory tracking is impossible:

In the absence of real-time data, it is impossible to determine how or where things move. As a result, there is a higher danger of theft and outdated inventories. It also renders tracking of inventory much more difficult.

1. c) Inadequate inventory balance:

Overstocking and shortage of stock result from a lack of equilibrium. Both circumstances might result in lost earnings and unnecessary expenditures.

1. d) Expensive in terms of time:

For instance, instead of scanning a barcode, data entry manually takes up a lot of time. With a structure, businesses may devote this time to other pursuits(Viktorovna and Ivanovich 2016).

(5) Because of the increasing rate of raw materials, the cost of personalised notebooks will likely rise. The business's margin will decrease since it is impossible to raise prices without prior notice once client orders have been placed. This sudden rise in the price of customized notebooks may or may not even affect the demand for the same. As a result of the above, the profit margins of the business will be affected. Unexpected obstacles, such as increased energy prices and unanticipated changes in the pricing of raw materials, are upsetting supply chain operations as well as making it more difficult for firms to remain profitable. Commodity price volatility may not be a passing phase, as the supply of various raw materials becomes more difficult to obtain, and it is up to producers to either find innovative ways to reduce expenses or by absorbing higher costs or passing on the hike in prices to consumers who are otherwise hesitant to spend(Alturki and Alfares 2019).

(6) These outcomes will result in the delivery of customised notebooks on time, but the profit per order will be lowered owing to the purchase of expensive raw materials. The business owner may be dissatisfied, but the client will be pleased after having delivered the personalised notebooks on schedule, which will boost customer loyalty as well as the retention rate of the customers, ultimately reaping benefits for the business making the owner satisfied(DEAL 2016).

Conclusion:

In conclusion, running a business requires a significant amount of effort and time. Small business owners are in command of all aspects of their organisation. Management is typically defined as the coordination and alignment of various operations inside an organisation. Business owners use management skills to fulfil their company's objectives and goals. Small business management involves the use of a mix of knowledge, education, and talent by business owners. It also demands the owner's influence over different business processes. The case analysis of the customized notebook business suggests that it is of utmost importance to maintain inventory and communicate any and all issues related to inventory management.

References:

Alturki, I. and Alfares, H., 2019, January. Optimum inventory control and warehouse selection with a time-dependent selling price. In 2019 Industrial & Systems Engineering Conference (ISEC) (pp. 1-6). IEEE.

DEAL, A., 2016. Small business.

Ferro, I. and Gomes, D., 2019. The Problematic of Inventory Management in Small Business 6. Tools for Supply Chain Management, 89.

Nemtajela, N. and Mbohwa, C., 2017. Relationship between inventory management and uncertain demand for fast moving consumer goods organisations. Procedia Manufacturing, 8, pp.699-706.

Scarborough, N.M., 2016. Essentials of entrepreneurship and small business management. Pearson.

Storey, D.J., 2016. Understanding the small business sector. Routledge.

Viktorovna, I.B. and Ivanovich, P.P., 2016. Issues of forming inventory management system in small businesses. International Review of Management and Marketing, 6(3).

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