(Analysis, Evaluation, Recommendations, Action Plan)
Amy Lin is the materials planner at the company Denniston Spices; however, it can be analyzed from the case that company is facing the problem regarding suppliers because the sales manager at Whittingham Foods has informed about the issues. As the company is going to implement the new enterprise resource planning (ERP) system, therefore, it needs to have the insight about the company potential supply problems so that there could be the identification of the problems. Denniston Spices is earning the sales revenues of about $5.5 billion by delivering the products and services in the 100 countries worldwide.
Thus, in this way, for the next years after implementing the ERP system, the company performance need to be more efficient, Amy is responsible for operating about 300 stock-keeping units (SKUs) of the company in order to bring the safety stock inventory for the company. A company policy that each and every SKU must have the minimum level of the safety stock, these safety stocks prevent the interruption and shortage of the supply. In the analysis, it could be said that company is selling the products at the price of $50 to $250 per pound with the shelf lives of concerning 90, 180, or 270 days. The major challenge in the case is the role of Amy’s because she has to balance the high level of the inventory costs.
Regarding evaluation of the case, it is known that Denniston Spices is implementing a new ERP system in the company so that the forecasting could be reasonably done and there could be the safety stock levels balance for the high inventory costs. The company focuses Supply Management so that purchase additional safety stock can be balanced effectively as there could be the analysis of the situations of the company. Safety stock levels and the company balance stockout risks were evaluated from the past two years, 2012 and 2013, so that there could be the better evaluation of the situation and inventory could be managed in an effective way. For the safety, a stock is quite important for the company to manage to manage the supply in the warehouses so that the order fulfillment can be completed on the time as the order need to be completed for the seven days so that company could acquire the efficient and effective inventory replacement.
The safety stocks provide the secure place for inventor material which can be delivered in the time of shortage. These are thus important steps which the supplier must incorporate while implementing the new information management systems in the company. Therefore, ERP system for supply chain management needed to be in line with the current inventory levels which are there to handle and consider. These implications are necessary and needed to be there in order to improve the overall processes.
It is recommended to the Denniston Spices that for implementing a new ERP system and to focus on the safety stock levels balance for the high inventory costs there is the need to keep track of the inventory, Amy needs to place the manager in every inventory so that there could be the proper evaluation of the cost. For the reliable forecast of the demand, the company should consult the professionals so that there could be indication or identification of the possible forecast error. Inventory counting system can prove to be best. Denniston Spices also need to estimates the cost of the inventory so that products can be given at the best prices and best period, as the shortage costs and the ordering costs with the holding cost should also be evaluated. It is recommended that the excessive inventory must not be present in the warehouse and it must be replenished with the adequate amount of the time and considerations.
|Implementing a new ERP system safety stock levels to balance
high inventory costs and time frame
|Management leadership||Managers are responsible||Effective leadership implementation||Human resource|
|Organizational accountability||Management of ERP system||Training sessions||Software and hardware|
|Business processes||Evaluation of stock level inventory||Performance matrices||Stakeholders|
|Technology Evaluation||ERP system as new technology||Awareness for users||ERP solutions|
|Implementing powerful ERP system||Knowing business processes||Implementation||Allocate employees|