The paper 'Issues in Supply Chain Management' is a great example of a Management Case Study. Laburnum is one of Australia's largest listed companies and has its headquarters in victoria. The firm has a diverse business portfolio ranging from office supplies, energy to clothing. The firm has committed itself to satisfy their shareholders while at the same time addressing the needs of different stakeholders. The firm makes constant performance monitoring for the diverse business portfolio based on its corporate strategy decisions. The energy and clothing portfolios are the largest and have the biggest share of their overall business.
At the moment, both energy and clothing portfolios are facing inefficiencies and challenges which can be attributed to procurement and supply chain management decisions. This report will address the specific inefficiency areas within the energy and clothing business portfolio of Laburnum Group. As an inventory controller at Sapphire energy, the report will evaluate the effectiveness of the current ordering system and how the system can be improved. As a new Senior Vice President of Supply Chain, the report will address the procurement and supply chain issues being faced by AusCotton. 2.0 Energy Portfolio: Sapphire Energy 2.1 Effectiveness of the current ordering system Sapphire Energy is facing several inefficiencies in its supply chain.
This is due to the fact that the current ordering system leads to a lot of wastage and is inaccurate. The amount of cable that is ordered is not the optimum amount based on business demands. There is a lack of peak effectiveness based on the current ordering system (Lee, Padmanabhan & Whang, 1997). Based on the calculations, it is clear that the business should make about 14 orders every year.
The current ordering system leads to the business ordering approximately 12687.3 meters or 41,625 feet in every month instead of 10587.228 meters or 34,735 feet. The difference in what is ordered and what should have been ordered leads to a difference of $23.61 every year. The difference is an indicator that there is a lack of efficiency in the current ordering system. Another factor that shows inefficiency in the current ordering system is the expected time between orders. The current time between orders is estimated to be 21.7 days based on calculations.
A calculation shows that the most efficient ordering system can lead to 18.6 days which is more efficient. 2.2 Improving the current system From the above calculations, it is clear that the current ordering system can be improved. This is through enhancing it to make the optimal units to be 34,735. The business will be to attain its annual demand through the improved system. In this case, the annual demand to be met will be 499,500. In the improved system, the number of orders that will be made in each year is approximately 15.
The improved system has the ability to meet an annual order of 521,025 feet. Economic Order Quantity (EOQ) is very applicable in this case to improve the current system (Khan, Jaber & Bonney, 2011). This is an accounting formula that will help the business to determine the point in which order costs and inventory carrying costs are least. This will lead to the most effective quantity being ordered. The business has to reduce order costs and also implement E-procurement.
This is due to the fact that the use of technology can help in reducing the costs which are accrued in processing an order (Monczka et al. , 2015).
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