Part Emporium Inc

1.0 INTRODUCTION AND COMPANY BACKGROUND

Part Emporium, Inc., was formed in 1973 as a wholesale distributor of automobile parts by two disenchanted auto mechanics, Dan Block and Ed Spriggs. Originally located in Block’s garage, the firmed showed slow but steady growth until 1976, when it relocated to an old, abandoned meat-packing warehouse on Chicago’s South Side. With increased space for inventory storage, the company was able to begin offering an expanded line of auto parts. This increased selection, combined with the trend toward longer car ownership, led to an explosive growth of the business. By the 1998, Part Emporium was the largest independent distributor of auto parts in the North Central region. In 2000, Part Emporium relocated in a sparkling new office and warehouse complex off Interstate 55 in suburban Chicago.

This report will write on the problems that arises from the Parts Emporium inventory managing systems, the potential solutions, theories that can be applied in the case study and lastly but not least the conclusion.

2.0 PROBLEMS

The root cause of the case is the inventory management system. Parts Emporium does not have any system to keep their inventory properly which they did not keep compile record in some of the areas. The inventory in wrong places that makes customer services is inadequate and also, lost their some 10 percent demand to the distributorship when they try to backorder the customer orders.

Even recently in the year of 2000, the new warehouse in suburban Chicago occupied 100,000 square feet although only a handful of new products have been added since it was constructed. The utilization of the warehouse increased from 65 percent to more than 90 percent of capacity. The sale growth even has stagnated during the same period. This is shown that, Parts Emporium has some issue on managing their inventory.

By focusing only on two products from extensive line which are EG151 exhaust gasket and DB032 drive belt, Parts Emporium...