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Question No 3 Develop a model of how you think the warehouse should work in this environment.

Analysis of problems Inaccurate inventory records (Accurate up to just 50%) Replenishment of orders due to inaccurate inventory accuracy Lack of communication between departments No procedure to manage faddish and seasonal inventory Inaccurate delivery of supplies by supplier (Either it is overstock or deliver late and most of time exceed given SKU) Poor response for order request Poor customer services Reduction in profits due to inaccurate inventory management Technology was not utilize properly No collaboration with the suppliers Poor customer service from supplier Keeping track of inventory due to overstocking Reduce profits due to above mansion reasons

MODEL FOR COSTMART Improve Inventory Record Accuracy As mansion in case study main reason for inaccurate order replenishment was inaccuracy in inventory recording. In order to improve in inventory record system, inventory over supply must be stopped. To reduce inventory record accuracy following areas must be considered Unauthorized withdrawals must be stopped. These withdrawals are due to over stocking No proper place for excess inventory Reduce obsolescence of inventory Training of warehouse staff

Communication between departments Communication between departments is very poor. Employees are not aware of the problems faced by other department. To reduce this problem integration of all process in very important. In this regard employee should share their problems and try to build team.

Understanding Supplier One of the major problem presented in this case study was that supplies were not accurate and on time. Orders were supplied either in more or in less quantities then actual requirement. The reason behind was cost. Suppliers are compelled to reduce prices, due to this reason supplier look for economies of scale and provide orders in a quantity that reduce cost regardless of requirements. In this way CostMart was not getting benefits of lower cost. Therefore it is more advisable for CostMart not to compel supplier to reduce cost but supply them in right quantity and on time.

Collaboration with Supplier One of the major problems was to manage faddish and seasonal inventory. Those items which have shorter lifecycle need to be replenish accordingly. Presently there is no procedure to manage such inventory. In this regard any of the Vendor Manage Inventory system (VMI) can be utilize in which supplier collaborate to manage inventory level in optimum cost. Warehouse Layout Consideration should be made to re design layout of the warehouse to make it more flexible, however this may cost more, but in longer run Costmart can get more benefit from redesigning layout. New layout should be made in a way that can handle more SKU for unpredictable sale items. Packaging System Develop flexible packaging system to pack items in accordance to requirements in less time. Training can be arranged for the employee to improve packaging capabilities. Use of ROPC and ROCC Reordering is also basic issue at CastMart. For seasonal items reordering should be based upon ROCC (Reorder Cycle Control). In ROCC orders are made periodically after certain time, In this case seasonal cycle time should be consider for reordering. ROPC (Reorder Point Control) should be use for those items which have high cost, low lead time and demand variation is high. Training of Staff Employees of the warehouse must be trained so that they manage inventory in more professional manner. Periodic Audit

Periodic audit must be arranged to match physical stock to the stock shown by the system. After audits corrective and preventive actions must be taken to reduce recoding errors. Material Handling System Improved handling system must be developed in order to reduce delivery time. As mansion in this case that many time it take long time to bring required items for delivery. Beside other factors material handling system should also be considered for improvement. Customer Services Customer service is extremely poor at CostMart case. Customers are not satisfied with their services. In order to improve customer service CostMart must develop system to accommodate customer according to their requirement. There should be some window to listen to customers grievances and worries and suggest solution to their problems.