The paper 'Purchasing and Inventory Management - Best-Buy Auto Group " is a good example of a management case study. As the newly appointed purchasing manager at Best-Buy Auto Group, I take this chance to address issues pertaining to the purchasing and inventory management among all dealerships the company owns. The following is a diagnosis of the weaknesses and the difficulties that the company faces. The Best-Buy Auto Group practices a decentralized purchasing and parts management whereby each dealership has its own staff for these functions. Each dealership performs its own independent sales forecasts based on historical data, service promotion, and special vehicle sales.
Although decentralized purchasing has its own advantages to the company, it also has its share of shortcomings. It is good since the local purchasing and inventory management personnel are well aware of factors and upcoming events in an area. The personnel has a sense of ownership and control which gives them motivation in their work. Additionally, personnel at this level can anticipate special promotions that are exclusively local in nature. Decentralized inventory management is a major cause of problems experienced in the Best-Buy Auto Group.
The personnel in each dealership is apparently, managing inventory on a highly subjective basis. This usually happens even when sophisticated tools are in place. Local inventory managers overreact to transient events in their respective dealerships. These managers have been unfair in backing for high levels of inventories being visually available at their locations. Coupled with the fact that each dealership has its own separate warehouse, this creates a large need for inventory at hand. For this reason, the company recently became financially overstretched since every dealership focuses on its own need rather than concentrating on Best-Buy Auto Group as a single unit.
Furthermore, decentralized inventory management does not take advantage of unique, advantageous buying chances as the company’ s information resides at different locations. The company faces a situation in which it has excessive inventory in stock, which, unfortunately, is not moving quickly enough. The problem is not isolated to this company only; actually, this is a major problem for most businesses. Business cash-flow comes from a timely-moving inventory.
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