Warehouse Recommendation

Introduction

As the case elaborates, the distributor plans to supply and sell to home centers, lumberyards and floor tile retailers primarily in Myrtle Beach, Charleston, Hilton Head and Savannah. They estimate that they will be able to turn an inventory of 1280 pallets twice a year.

Being a newly-hired consultant, I would like to recommend that inventory and forecasting techniques for ongoing inventory management and demand forecasting should be revamped and changed thoroughly. Key to inventory management is understanding uncertainty. In almost every aspect of supply-chain planning, we are faced with risk and uncertainty (Mandviwalla, 2006). The observed result of this uncertainty is variability throughout the supply-chain that wreaks havoc on the firms' ability to serve customers and drives up costs. Uncertainty and the resulting variability we observe originate from several sources and then combine and propagate throughout the supply-chain (Lee, 2007).

Recommendations and Discussion

To begin with, planners are never absolutely certain when or what the customers will demand. This problem is further complicated by the fact that we do not know exactly what the competitors plan to do. On the other hand, partners in the supply-chain are not always as reliable. Suppliers often fail to meet delivery expectations, transportation providers run late, and logistics providers make mistakes. And, lest clients are tempted to blame others for their problems, internal processes are far from error free. Buyers forget to place orders or order the wrong quantities; warehouses lose materials; and factories ruin good parts (Baganha, 2008). In the end, firms often find that we can't always supply whatever it is the customers want. Failing the customer erodes a company's brand equity in the market place and jeopardizes the value to all its stakeholders.

While we often refer to inventory in a generic way, there are actually many different types of inventory and ways to categorize it.

Inventory helps companies achieve many different objectives including reducing costs, improving customer service, and financial hedging against market uncertainties. For a manufacturer, inventory arrives from suppliers as raw materials. Within the manufacturing process, the raw material is transformed through fabrications and assembly into finished good inventory. While in production, we usually refer to the inventory as work in process (Mandviwalla, 2006).

Distribution Process

The form of raw materials and work in process varies widely depending on the industry and product. For an assembly operation like tile manufacturing, the raw materials are subassemblies like housings that are assembled into ...