A Plan to Improve the Ordering Strategies as a Step to Improve Inventory Management in Unit X
Upadhyay, Yash (2024)
2024
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2024052917769
https://urn.fi/URN:NBN:fi:amk-2024052917769
Tiivistelmä
The objective of the thesis was to optimize the case organization´s inventory system with the focus on improving its Ordering strategies. The business challenge related to poor ordering strategies, which involved insufficient demand forecasting due to sales fluctuations, and considerable wastage, exacerbated by complexity in sales patterns. As a result, there was an urgent need to improve the Ordering strategies and more accurately forecast demand and protect against stockouts and overstock in Unit X.
During the current state analysis, interviews, discussions, and analysis in internal documents shed light on the current Ordering strategies, inventory management, and the specific unit´s needs. This analysis helped in understanding the basis behind the relationship between inventory management and the Ordering system. The analysis results pointed to a number of weaknesses especially related to the current Ordering strategies and resulting wastage. These weaknesses informed the topics in theoretical framework as the next step of the thesis.
The literature and best practice review on operations management and inventory tools helped understand the concepts and solutions for improving the Ordering strategies. Key practices such as Safety stock, Reorder point, and KPIs based on ABC analysis were later applied in the proposal development. In the Proposal, the improvements were developed to the current Ordering list, the product review system based on the product ABC analysis and the Safety stock and Re-order points, which were crucial to meeting the market demand and variability in lead time. Moreover, using the FIFO method was a significant factor because of the perishable items in the unit.
In the Validation, further development and amendments were made to the Initial proposal. In particular, the method to minimize wastage via training of the employees was supported by the top management as a suitable approach that can bring many positive changes to the firm. Lastly, the study also produced Recommendations for continuous improvement. In the recommendations, it was stressed that, the more the data becomes available, such as time series data and customer and peer feedback, the more reliable and accurate will be the stock orders in Unit X. Next, Unit X will need more accurate and recent data to make any further improvements, especially in demand forecasting.
During the current state analysis, interviews, discussions, and analysis in internal documents shed light on the current Ordering strategies, inventory management, and the specific unit´s needs. This analysis helped in understanding the basis behind the relationship between inventory management and the Ordering system. The analysis results pointed to a number of weaknesses especially related to the current Ordering strategies and resulting wastage. These weaknesses informed the topics in theoretical framework as the next step of the thesis.
The literature and best practice review on operations management and inventory tools helped understand the concepts and solutions for improving the Ordering strategies. Key practices such as Safety stock, Reorder point, and KPIs based on ABC analysis were later applied in the proposal development. In the Proposal, the improvements were developed to the current Ordering list, the product review system based on the product ABC analysis and the Safety stock and Re-order points, which were crucial to meeting the market demand and variability in lead time. Moreover, using the FIFO method was a significant factor because of the perishable items in the unit.
In the Validation, further development and amendments were made to the Initial proposal. In particular, the method to minimize wastage via training of the employees was supported by the top management as a suitable approach that can bring many positive changes to the firm. Lastly, the study also produced Recommendations for continuous improvement. In the recommendations, it was stressed that, the more the data becomes available, such as time series data and customer and peer feedback, the more reliable and accurate will be the stock orders in Unit X. Next, Unit X will need more accurate and recent data to make any further improvements, especially in demand forecasting.