Question

Conscious Capitalism - Bikes Simulation

I am sure individually each of you are happy/unhappy about the performance on certain measure(s) (net profit, market share, balanced scorecard, cumulative balanced scorecard, revenue, expense, cost, etc) of your team/company.  Individually identify the performance criteria on which your company is performing below expectation and on which it's performing above expectation. Also, provide reasons for each of them. Next, describe if you personally could have done anything to help the performance (I don't expect similar answers from every member of a team, this is an individual discussion and not a team exercise). (Also, your response needs to be at least 3 paragraphs)

Answer 1

I work as the inventory manager in a manufacturing company. Key performance metrics used, for effective warehouse management systems, are as follows:

• Receiving Efficiency: This KPI indicates the efficiency with which incoming stocks are received at the warehouse
  • The cost benefits of this KPI must be high
  • This metric is in the range of 0.92-0.95 which is quite good. The company is performing well with regards to this metric.
• Carrying cost of inventory: The carrying cost of inventory must be low so as to portray efficiency of warehouse management system
  • The cost benefits of this KPI must be kept low
  • The warehouse of my company is comparatively smaller and it needs to hold, large quantity of product. So, the carrying cost of inventory is usually quite high.
  • The company is not performing well in this metric
• Overall inventory turnover: The frequency with which inventory flows out of the warehouse.
  • This KPI must be high for effective warehouse management system
  • The company is not performing well with regard to this metric also. The overall inventory turnover is around 60%
• Labor and Equipment Utilization: This KPI depicts how effectively the warehouse is able to utilize its labor as well as material handling equipments
  • The labor and equipment utilization must be high
  • The labor as well as equipment utilization of the company is quite high as the labor has been well utilized by dividing them into shift work

The company is not performing well with regards to Carrying cost of inventory and Overall inventory turnover. In my views, ERP can prove to be a path changer for SCM and inventory management. ERP is enterprise resource planning. It is basically the management of core business processes of a company. ERP works with the objective of enhancing and streamlining the internal business operations of a company.

1. ERP helps in managing the network traffic of the organization effectively
2. ERP facilitates the overall company’s data organization, collection, processing and retrieval as it uses a structured format.
3. Inventory can be tracked and effectively managed with the help of ERP
4. Demand and Planning of the company can be conducted easily using ERP system, thereby keeping a check on the inventory levels of the company
5. Access management controls are used to manage the data retrieval operations.

The integration of ERP and SCM in the business model of the company will facilitate the growth and development of the company. The company can integrate its SCM with various information systems like customer relationship management system (CRM) and enterprise resource planning (ERP). This integration will facilitate the maintenance of lean inventory by the company. Demand forecasting will also become more accurate. This strategy will facilitate the overall operational efficiency and consumer responsiveness at the company. The company would be able to exert its competitive advantage on its competitors, because of the same. Comprehensive management of the company’s network traffic will get facilitated by the SCM system. Any kind of data retrieval would be possible to be done in minutes. This will enhance the performance of the inventory as well as overall company.