Acme Widget Company

Team Arctic Blast

Acme Widget Company Write-up

The problems facing Acme Widget Company after decentralizing its inventory control to sales locations include:

• sales cannot get stock shipped because warehouses do not have the inventory

• warehouse not able to get their stock replenishment orders because the customer orders are getting preference

• no communication between sales, warehouse, and branches

• warehouses limited to one-month supply

• little experience with branch-warehouse system overall

• using inventory turnover as a metric of successful management

• lengthy lead times

The issues that the sales manager blamed on the production and inventory control personnel included:

• did not understand the inventory increase (“a month supply at one location is the same as a one month supply divided among the four locations”)

• 40% of the orders were still shipping out of the main location because the branch warehouses did not have the inventory

• missed quota by 10-15% ' poor customer service

• warehouse orders were not considered a priority ' poor customer service

• customer orders took priority over the stock (warehouse) replenishment orders despite the fact that the warehouses were their biggest customers

• poor management at the main plant (sales force did not have the needed support)

The issues that the inventory manager blamed on the marketing and sales control personnel included:

• Warehouse true and projected inventory needs unclear - they do not know if the warehouse truly needs the inventory, so they are torn when a warehouse order comes in versus a customer order. They know the customer needs the order immediately, but the warehouse order may be premature

• When they receive the orders, they do not have the inventory levels of the warehouses and they receive the orders too late

• Warehouses purposely keep inventories low during off-peak times, which leads to chaos when inventory demand rises, resulting in a shortage of...