Excerpt coming from Case Study:
Provided the competition in the field, the production divisions need to create competitive advantage in order to develop and keep a significant customer base. In order to reach such a standing, manufacturing categories must meet a series of requirements of ORIGINAL EQUIPMENT MANUFACTURING (OEM) customers.
Which means that manufacturing categories must provide high quality products, the prices should be established in accordance with the products’ quality, with customers’ choices, and with the prices practiced by company’s rivals.
The developing divisions will be organized as profit centers, which means they are really allowed to develop and applied their own buyer and product sales strategy, with all the condition of aligning these approaches with the general strategy with the company. It is more successful for them to treat the demands of ORIGINAL EQUIPMENT MANUFACTURING (OEM) customers sometimes in the loss of I AM Manufacturing.
Is it doesn’t top management’s decision to never allow I AM Marketing to trade other companies’ products. Consequently , if the best management decides that the manufacturing divisions will be discriminating I AM Manufacturing, the managers can alter the situation by allowing the division to offer certain goods of others, based on several conditions arranged by the company and by WAS Manufacturing.
One other issue which the company’s top management must address is usually represented by the inventory situation. Given the very fact that stocks within the organization are considered to become excessive by the controller, apparently the company is not able to develop and implement the right inventory approach.
It is not malfunctioning inventory administration if the sections conduct increased inventory. This is because this way, the divisions make sure their stocks and shares are in accordance with customers’ demands. Even so, the truth that these partitions conduct stocks that often, means inefficiency regarding inventory supervision.
In order to improve the efficiency of inventory managing, it is recommended that the best managers talk about the basic principle of products on hand proportionality when developing and implementing the inventory system. Such an products on hand managements will be based upon demand.
This principle can be represented by the fact that the amount of time invested in conducting the inventory on the category of items is used for the inventory of all various other goods manufactured by the company. Because of this products work outs will take place at the same time. This can help reduce surplus inventory. The financial resources lead from this expense reduction may be reallocated in other areas.
Nevertheless , it is not easy for managers to formulate and implement such an inventory management system. This inventory method is based on demand forecasting. Products on hand management will need to integrate require forecasting inside its actions. However , it can be required that the demand forecasting is definitely an accurate one, in order to reduce inventory.
Also, it is recommended that you can actually top managers focus their particular strategy on the Just in Time method. This process is well-known for the truth that it allows reduce costs. In the event the company’s best managers make use of this method the moment developing and implementing the inventory management system, the company should be able to determine the sales the company can rely on. That way, the company’s products on hand management system is intended to increase its efficiency and help the organization improve its sales situation.
Reference list:
1 . Neighbour, J. (2010). Transfer Pricing: Keeping It by Arm’s Duration. OECD Viewer. Retrieved Sept 21, 2010 from http://www.oecdobserver.org/news/fullstory.php/aid/670/Transfer_pricing:_Keeping_it_at_arms_length.html.
