Ananda Budi Subagja (29120574) / YP64C

Scientific Glass, Inc Case Summary

Scientific Glass, Inc (SG) is a privately held company that provided specialized glassware for
laboratory and research facilities. The company is a midsize player this increasing competitive
space. Their annual estimated sales are over $2 billion and mostly sold the products in North
America, Europe, and Asia Pacific. The price of their glassware products are ranging from $4-
$20. The company successfully carved out a niche by focusing on providing durable products,
innovative design, and superior service.
Ava Beane, as the Manager of Inventory Planning were given the task to find a more
effective way to manage its inventory. There are a disturbing trend that is the inventory balance
were increasing substantially, which tied up extra capital the company needed to fund its
growing operation and in recent years they exceeded its target debt to total capital ratio of
40%.
SG focused on landing long-term supply contracts with its customer (1-3 years) and
often had automatic rollover provision. The sales cycle ranged from 3-6 months. The majority
of the order exceeded $200 and the company agreed to pay for ground shipping for order of
that amount. The company is trying to maintain their growth by: Building dedicated sales force
in North America to educate customers about new product features, Increasing customer
service level by reducing the time it takes to receive order and deliver products, and Adding
regional warehouse in the US and Canada to improve customer respond time.
The company policies regarding target inventory levels at the warehouse were
regularly violated. Any trunks stock allocated to individual sales representative counted
against the target inventory level for the originating warehouse. SG used two separate
computer system for their inventory management. One for ordering and inventory monitoring,
and the other for production and warehousing. Every product has a minimum stock order. SG
attempted to gain a better tally of the inventory by conducting physical counts, but changes
and improvement are still needed to avoid errors. Here’s how their inventory operates:

Their inventory balances increased dramatically, as did distribution and inventory

retention prices. SG plans to: 1) suggest policy changes, but some sales claim this will
jeopardize the company's ability to retain hard-won customer accounts; 2) recentralize the
North American warehousing role, using Winged Fleet for distribution (shipping:
$23.60/pound) and closing all or some of the regional warehouses (shipping: $20.60/pound
from Dallas); 3) outsource the warehousing function to Global Logistics, but all products must
be transferred to Atlanta (shipping: $26.25/pound).