Kuiper Leda

Running head: PROBLEM SOLUTION: KUIPER LEDA

Problem Solution: Kuiper Leda

University of Phoenix

Problem Solution: Kuiper Leda

Effective supply chain management practices are vital to the success of every business that partakes in the supply chain and deals with customers. Many companies are beginning to realize that in order to satisfy all their stakeholders and be successful, they will need to ensure best practices in their supply chain management. A company can ensure a successful supply chain management by first assessing best supply chain management practices in the industry. Other steps to ensure success include inventory management and control, forecasting, demand management, total quality management and identification of all bottlenecks. The goal of this paper is to assess and analyze the inventory management and supply chain management of Kuiper Leda Inc. (KUIPER LEDA INC.). Stakeholder perspectives and ethical dilemmas will be considered and a problem statement will be developed that will help identify the gap between the company's current situation and its end state vision. This problem statement will be the basis of future solutions for KUIPER LEDA INC..

Situation Analysis

KUIPER LEDA INC. has been in operation for 10 years with an assembly plant that assembles ECUs and a production line dedicated to microchips. They have recently entered into another product line - Radio Frequency Identification Devices (RFID). KUIPER LEDA INC. recently received a large order for ECUs and RFIDs from Midland Motors. This order would greatly benefit KUIPER LEDA INC. as Midland Motors is considered a major auto. KUIPER LEDA INC. does not currently have the manpower or resources to handle the increasing load of request and they will need to find ways to meet the sudden increase in requirements in order to satisfy their stakeholders. KUIPER LEDA INC. will need to determine how they would meet their customer needs. Outsourcing some of the requests is an option that might pose some problems for KUIPER LEDA INC. but help meet customer needs. KUIPER LEDA INC. will need to reassess its supply chain and inventory in order to be able to meet similar future needs. The current lack of supply chain components and the lack of principles of inventory management within the organization are some of the main events that led to the identification of issues and opportunities within the scenario.

Issues

 A major issue within the scenario is the effect of inventory management on cash conversion cycle and the costs of goods sold. Cash is very vital to the smooth running of any business and when cash is tied up, working capital needs cannot be met. "It is important for managers to realize that how they run items using inventory control logic relates directly to the financial performance of the firm" (Chase et al, 2006). A company's cash conversion policy (or cash conversion cycle) is, in short, the amount of time cash out-flow turns into a cash in-flow for the company. The more inventory a company has tied up in the warehouse to long payment terms (A/R) (i.e. net 45 days) all result in extending a company's cash conversion cycle. KUIPER LEDA INC. currently does not have enough in their inventory to meet customers' needs which means that their inventory is not being managed appropriately.

 The forecasting measures being implemented at KUIPER LEDA INC. is neither accurate nor efficient: Forecasting is considered a major principle of inventory management and can lead to a successful or unsuccessful supply chain. Forecasts are the basis of planning for the future and are vital to every business organization and for every significant management decision. "Production and operations personnel use forecasts to make periodic decisions involving process selection, capacity planning, and facility layout, as well as for continual decisions about production planning, scheduling, and inventory" (Chase et al, 2006). When forecasting analysis is being conducted, changes on the general economy will be taken into consideration. Other things that will be considered include changes in industrial and private consumer behaviors, surplus or shortage of essential complementary items and potential demand. Organizations need to take an active role in managing both their dependent and independent demand. Taking an active role includes applying pressure to its sales force, offering incentives to customers and to personnel and offering discounted or reduced prices. KUIPER LEDA INC. failed to take an active role in influencing its demands. If they had, they would have expected the large order and be better prepared to accommodate that request.

 KUIPER LEDA INC. has failed to determine the effective capacity in their organization considering all bottlenecks. Every organization has a capacity and when this is reached, they will be unable to produce more than they can. For KUIPER LEDA INC., their customers and their potential demand were not taken into consideration. If they were, KUIPER LEDA INC. would have been better prepared by increasing their capacity, obtaining more resources, or be prepared to outsource some of their functions.

 The ineffectiveness of production planning at KUIPER LEDA INC. is another issue facing KUIPER LEDA INC.. Every organization should have a business production plan that provides a clear direction in terms of sales revenue, inventory, capacity and target for each year. The production plan considers the annual forecasts and orders in order to generate all demand figures. Without proper production planning, an organization will have difficult managing and controlling its inventory. In the KUIPER LEDA INC. scenario, it is stated that the timeline for production plan is on a quarterly basis. KUIPER LEDA INC. is not even assured of customers who might cancel or reschedule orders. Their plan was not stable.

 Another issue in the scenario is that of quality for the goods that KUIPER LEDA INC. will be providing to its customers. Since KUIPER LEDA INC. might be unable to meet current demand needs, they might have to outsource some of their processes to another company. The RFP from Midland Motors clearly outlined the expected quality specifications for components used in both of their products. If KUIPER LEDA INC. decides to outsource these demands, they will be taking a risk of not producing and providing quality products. The concept of total quality management might not be applied since KUIPER LEDA INC.