The policy was to have raw material available at least two weeks in advance of p

Question

The policy was to have raw material available at least two weeks in advance of production. Raw material deliveries also were scheduled to accommodate full truckload shipments of about 80,000 pounds.
Three years prior, Southern had contracted its warehousing and transportation services to a third-party logistics organization, Fehr Logistics Company. Fehr was responsible for providing inbound and outbound transportation services and managing the 50,000-square-foot warehouse adjacent to the manufacturing facility.
The contract with Fehr specified staffing levels and hours of operation and provided the supplier with a profit based on a percentage of its total costs. After some initial problems, management was generally satisfied with its relationship with Fehr.
RAW MATERIAL INVENTORY
Isaac Theissen had become concerned regarding a large amount of raw material inventory. Inventory records for July indicated that there was approximately $20 million of inventory on-hand, and on Tuesday he had asked Alice to investigate, commenting that: "Our customers certainly don't carry this amount of inventory. Why should we? I want you to look into the situation and see what we can do to fix it."
Earlier in the day, Alice decided to pay a visit to I warehouse and was surprised with what she saw. The warehouse was completely full of coils of steel bundles of raw tubes. Several trailers were parked on waiting to be unloaded. In addition, there appeared to be a shortage of staff at the warehouse. The normal complement was eight, but Alice only identified five people.
PREPARATION FOR THE MEETING
As Alice prepared for the Friday meeting, she made a list of issues that she would have to address with Isaac. Based on what she knew so far, Alice agreed that opportunities existed to reduce the amount of inventory, but Isaac would want specific targets and the timing identified. Furthermore, he would also need assurances that the inventory levels could be reduced without affecting operations or customer service. Recognizing the importance of the project, Alice has blocked off the next two days. She wondered what steps she should take next.
ASSIGNMENT
Put yourself in the shoes of Alice McKenzie — what steps are you going to take next?

Explanation / Answer

The policy was to have raw material available at least two weeks in advance of production. Raw material deliveries also were scheduled to accommodate full truckload shipments of about 80,000 pounds.
Three years prior, Southern had contracted its warehousing and transportation services to a third-party logistics organization, Fehr Logistics Company. Fehr was responsible for providing inbound and outbound transportation services and managing the 50,000-square-foot warehouse adjacent to the manufacturing facility.
The contract with Fehr specified staffing levels and hours of operation and provided the supplier with a profit based on a percentage of its total costs. After some initial problems, management was generally satisfied with its relationship with Fehr.
RAW MATERIAL INVENTORY
Isaac Theissen had become concerned regarding a large amount of raw material inventory. Inventory records for July indicated that there was approximately $20 million of inventory on-hand, and on Tuesday he had asked Alice to investigate, commenting that: "Our customers certainly don't carry this amount of inventory. Why should we? I want you to look into the situation and see what we can do to fix it."
Earlier in the day, Alice decided to pay a visit to I warehouse and was surprised with what she saw. The warehouse was completely full of coils of steel bundles of raw tubes. Several trailers were parked on waiting to be unloaded. In addition, there appeared to be a shortage of staff at the warehouse. The normal complement was eight, but Alice only identified five people.
PREPARATION FOR THE MEETING
As Alice prepared for the Friday meeting, she made a list of issues that she would have to address with Isaac. Based on what she knew so far, Alice agreed that opportunities existed to reduce the amount of inventory, but Isaac would want specific targets and the timing identified. Furthermore, he would also need assurances that the inventory levels could be reduced without affecting operations or customer service. Recognizing the importance of the project, Alice has blocked off the next two days. She wondered what steps she should take next.
ASSIGNMENT
Put yourself in the shoes of Alice McKenzie — what steps are you going to take next?

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.