Inventory and Supply Chain Management at ORUN Manufacturing

Introduction: ORUN's Supply Chain Challenge

ORUN is a fourth-generation family-owned business with plants in three states that operate relatively similar product lines and manufacturing processes. The company, which also maintains a corporate headquarters, is regarded as a leader in the design, production, and distribution of metal cabling and its associated products. The company's products are commonly utilized in the automobile and telecommunications sectors. Despite its profitability, the firm's owners — including the Chief Executive Officer — have identified several core problems that need to be resolved in order to obtain a competitive advantage in the market. The market comprises several foreign and multinational business rivals as well as prospective customers. As a result, the company faces the need to resolve strategic and operational problems, especially with regard to production planning and materials management. This paper examines the inventory and supply chain management issues facing the company and how to resolve them effectively.

Inventory and Supply Chain Management Problems

Following a review of the situation with the Chief Executive Officer, five major goals have been developed as the basis for addressing the firm's present challenges. These goals include enabling the CEO to reduce costly inventory, enhancing ORUN's overall supply chain management, and ensuring demands are met while preventing stock-outs and reducing overall costs. The remaining goals are standardizing business practices among the four plants with a specific supplier, and improving the efficiency of real-time information on company-prepared orders and forecasts. These goals are crucial for ensuring that inventory and supply chain management processes balance demand and supply, which leads to fulfillment of customer demands while maintaining adequate supply (Esper & Waller, 2014).

The first two goals relate to inventory management while the remaining three relate to supply chain management. Based on a review of the scenario, the inventory management problems at ORUN include the failure of plant operating results to reach local and corporate headquarters management in a timely manner. Additionally, there is a lack of clarity on the value of vendor contributions, a lack of agreements on the profitability of some products or long-term contracts, and a failure by operating units to share their metrics across the firm. The supply chain management problems, on the other hand, include large communication gaps between ORUN's headquarters and its plants, the production of relatively similar product lines across different plants, and the absence of processes for unified supplier management. This lack of unified supplier management is attributable to the fact that purchasing managers at each plant make decisions independently. Additional supply chain management issues include variations in the processes used for supply chain management, financial reporting, production, and marketing.

Conclusion

ORUN is facing several problems in its inventory and supply chain management system, which have in turn affected its competitive advantage in the market. Since the firm is experiencing intense competition from foreign and multinational companies, addressing these challenges is critical to enhanced profitability. In this regard, the firm should consider adopting suitable inventory and supply chain management systems and processes that are aligned with its strategic goals. During implementation, the effectiveness of these systems and processes should be evaluated through metrics such as inventory turnover, customer satisfaction, product quality, and cycle time.

References

Esper, T. L., & Waller, M. A. (2014, April 24). Introduction to inventory management: Principles and strategies for the efficient flow of inventory across the supply chain. Retrieved April 26, 2017, from http://www.informit.com/articles/article.aspx?p=2192703&seqNum=2

Hamel, G. (n.d.). The disadvantages of holding too much inventory on hand. Retrieved April 26, 2017, from http://smallbusiness.chron.com/disadvantages-holding-much-inventory-hand-22710.html

Kakati, W. (2008, October 13). Manage your inventory effectively: Avoid stock-outs and overstock. SME Times. Retrieved April 26, 2017, from http://www.smetimes.in/smetimes/in-depth/2008/Oct/13/manage-your-inventory-effectively-avoid-stock-outs-and-overstock.html

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