Supply chain management Paper
Supply chain management and inventory management: 20 marks: (approx. 800 words): Evidence required:
- Explain current status of SCM and inventory management and identify issue(s) relating to supply chain and inventory management (5 marks);
- Evaluate the supply chain performance by calculating percent of assets held as inventory and inventory turnover (5 marks);
- Evaluate inventory management performance by calculating economic order quantity (EOQ) (5 marks);
- Suggest how to further improve SCM and inventory management (5 marks).
Supply chain management
How to evaluate performance of SCM (supply chain management): Methods: percentage of assets invested in inventory and inventory turnover. Use any one of the following two methods for evaluating SCM performance of the case study.
Method 1: Percentage of assets invested in inventory:
- Identify the industry in which your company operates and how much assets are invested on average as inventory by a typical company in that industry (i.e., find an industry standard as a benchmark)
- Search information about the percentage of investment in inventory of close competitors
- Calculate assets in inventory in your company
- Use the formula to calculate percentage of assets in inventory = (average inventory investment/total assets)
- You should be able to find data relating to annual data of average inventory and total assets of the company you are investigating
- Look at KATHMANDU example. The information about total assets and inventories are highlighted. Use the data to measure percentage of inventory investment. Supply chain management Paper
- Evaluation of the SCM performance implies to examine data over past few years (5 years, subject to the availability) and compare it with industry standard and with competitors
- Suggest on how to improve the performance of SCM of the company
Method 2: Inventory turnover:
inventory turnover= (cost of goods sold/average inventory investment)
Cost of goods sold is the cost (in $) to produce the goods or services sold for a given period of time (say, a year). Average inventory investment (in $) in the same period.
Financial details of company
Supply chain management has a key role in improvement of a factory’s total performance. Good supply chain practices can improve customer satisfaction by reducing overall costs of a company (Krajewski, Ritzman, & Malhotra, 2013). Effective supply chain management can reduce the average inventory investment to a significant figure of percentage with proper tools and understanding. Hence both supply chain management and inventory management are equally important in an organisation to improve the overall performance. However, it is hard to find out companies with a perfect supply chain and inventory management. Kathmandu retail stores also face several issues with both supply chain management and inventory management.
Issues related with supply chain and inventory management of Kathmandu retail stores.
- The demand profile of the goods is focused at the end of the season that increases demand uncertainty and hence, stock-outs and shortages cause lost revenue by the cancelled orders more often (Nzpics, 2017).
Another issue is related to international supply chain according to Gray Shaw, the corporate social responsibility manager (Idealog, 2018). Due to the global supply chain complexity has increased, manufacturing-related problems increased by….Show More Content….