Reasons for excess stock at Wheeled Coach
Wheeled Coach began to experience excess inventory problems due the highest stock accurateness requisite for material requirement planning structure. This is because material resource planning requires accurate bills of materials (BOMs) and inventory records. Thus, inaccuracy may lead to excess inventory. As inaccuracies of one or more data, sources affect the MRP systems (Heizer & Render, 2010)
Another cause was a result of a latest succession of stock reports caused by the International business machines MAPICS material resource planning structure acquired by the company. This is because as computerized bills of material (BOMs) were implemented a ‘where used’ was to determine the items that should be in inventory. On the contrary, most inventory items were not listed on BOMs for any current products due to BOMs inaccuracy and errors. This led to double-check the accuracy of BOMs. As correcting BOMs can help determine what is required for purchase and have available items for the production process. That is why the company adapted bills of materials to help it correct the inaccuracy (Shapiro, 2009, p.161).
Other cause of excess inventory was occasion by swift transforms in ‘ambulance outline and machinery as noted by Lynn Whalen. Wheeled Coach remains the only giant in a group of 45 competitors, due to its strong purchasing power.
In addition, some excess inventory items were occasioned by customer changes in specifications after the Wheeled Coach had placed orders. This was so as indicated in the case study that despite of Wheeled Coach production rate time lasting only 17 days, most of its purchased items needed longer lead times. This is evidence by the organization’s effort to custom design and assembles products that meet customer’s preferences and specifications among other demands. Other reasons are due to minimum orders requirements, purchasing and receiving errors (Heizer & Render, 2010).
A Plan that I would suggest for dealing with the problem above
Excess inventory is an enormous challenge that Wheeled Coach continue to grapple with and remains the company’s most expensive asset.
Therefore, amongst the plan that I suggest for wheeled coach too deal with excess inventory includes; finding out materials or items that can be returned to the vendor for near full credit. Despite of hurdles Wheeled Coach is likely to encounter it should be able to find efficient ways of disposing excess inventory.
Second plan will be to find out what can be substituted on subsequent units for the items called out on the bills of materials (BOMs). This will pose a challenge, as it is hard to substitute excess components in units and their related BOMs as they are being assembled. Thus, it will require astute and innovation on part of those involved making such alternatives and keeping bills of material (Heizer & Render, 2010).
Another plan calls for Wheeled Coach to work at some sort of sale, scrap or supply to other auto dealers/truckers who may require such items. Returning some of the materials to supplier will prove a headache, as most suppliers are unlikely to accept such old products. However, in one way or the other the company should be able to deal with excess inventory by either supply or disposing of such items. Selling excess items in store instead of continuous purchase and wasting available items that can be used in the production process. This requires marketing involvement and techniques such as publicity, cataloging among other efforts for the Wheeled Coach to sale excess inventory (Heizer & Render, 2010).
Heizer, J., & Render, B. (2010). Principles of Operations Management: Chapter 14 Material Requirements Planning (MRP) and ERP, 8th, Ed.
Shapiro, J., & Wagner, S. (2009). Strategic Inventory Optimization. Journal of Business Logistics.30 (2).161.
Volman, T, E, Berry, W.L., & Whybark, D.C. (1992).Manufacturing Planning and Control Systems, 3rd Ed, IRWIN, Burr Ridge, IL
PDF. 1Material Requirements Planning (MRP).