Summary
The water level in the picture represents the inventory that Smitheford Pharmaceuticals has. To be more specific, the tops of the pond shown, finished goods, represent the company’s stock. Once it starts to decrease, the rocks that are a metaphor for organizational problems begin to reveal themselves. In order for Smitheford Pharmaceuticals to reduce inventory costs, practical solutions must be developed to remove these metaphorical rocks.
Preventing Overstocking after an Outage
There are three maintenance policies that companies need to adopt to prevent themselves from immediate restocking and subsequent out-stocking after another outage. Proactive maintenance allows management to identify inventory errors, which provides opportunities for timely repairs and replacements that extend the useful life of assets. With predictive maintenance applied, controlling inventory size becomes less costly in terms of money and labor. It also improves forecasting as the organization now has access to critical knowledge from hard data analysis of their history of inventory handling. Corrective maintenance would make the fixing of inventory errors faster for Smitheford Pharmaceuticals. The company also needs to change its approach to space management towards a real-time, digitalized, comprehensive one. According to experts, “one of the biggest risks of overstocking is not having enough space to store the parts” (Overstocking, n.d., para. 7). The proposed new space management strategy would lead to the optimization of warehouse space and more efficient use of inventory assets.
Problems in the Production Process
Inconsistent product quality leads to a longer production process, and, as a result, fewer items are produced. Moreover, the very fact of a brand being inconsistent in any of its aspects repels customers (Cscheafer, 2018). Poor forecasting affects production by creating monetary losses and overstocking due to underproduction or overproduction of items. Lack of employee involvement is the most damaging stone of the ten. Problems coming from this managerial omission include low organizational performance, poor product quality, defects, employee demoralization, and monetary, resource, and time expenditures. Incorrect specification limits are detrimental because they lead to product design flaws, high volumes of defective items, and huge losses. Product defects cause the organization to make repairs, replacements, recalls, and loss of customer loyalty.
Lack of management support and low worker engagement are interconnected negative trends in the production process, as the former often causes the latter. Business professionals such as Jackson (n.d.) call this and similar detached attitudes of managers towards their subordinates a morale-killer. Poor supplier relationships usually manifest themselves in losing long-term profits and the constant need to search for new partners. Variability in raw material quality results in defective and low-quality items and inconsistent production processes. Intermittent pauses in production, time expenditure, and lack of synchronicity in the task performer are usual consequences of unbalanced lines.
Improving Processes in Smitheford Pharmaceuticals and Reducing Their Inventory
The keys to faster and more efficient processes and adequate inventory are a systematic analytical approach to production management and the involvement of all stakeholders. As mentioned above, a real-time viewpoint should be adopted when evaluating the company’s positive elements and flaws in various processes and structures. A well-designed data collection plan reveals the mechanisms that lead to a large inventory and options for optimizing it. According to Martins (2020), strategic meetings with all stakeholders are also needed. These show employees what the company is going for and provide the other side with knowledge of how the various areas of the organization function. Specifying targets and developing a realistic improvement plan should be the concluding steps toward reduced inventory.
References
Cscheafer. (2018). The importance of consistent products. Means Engineering, Inc. Web.
Jackson, S. (n.d.). 6 workplace morale-killers to avoid: 6 workplace issues that will kill employee happiness. Organizational Psychology Degrees. Web.
Martins, T. (2020). 5 steps to “lower the water level” in your organization. LinkedIn. Web.
Overstocking: Why is it bad and how can you prevent it? (2022). Infraspeak. Web.