Success of a business
What determines the success of a business is the ease and efficiency with which it ensures its customers are served coupled with its financial soundness. Long-term viability of a business depends mainly on three policies; good customer service, low inventory cost and low operating costs. Prudent decisions by an inventory controller are what determine the success or failure of a business, both in the long and short term. Ashley ward Inc should adopt the FIFO (first in first out) rule to ensure items do not stay long in the stores. Using this method of inventory control ensures that goods are not wasted, the company minimizes loses and maintains good customer service (Wild p 6).
Performance of the business
Wild (p 28) advises Ashley ward Inc that good customer service is increasingly becoming businesses’ main focal point, focusing on products availability and good customer relations. Ashley ward Inc. should gear their customer relation efforts towards ensuring repeat buying by satisfactorily meeting clients’ expectations. The company should also apply the Pareto’s law by putting a tighter control on their most valued materials in terms of efficient restocking methods, security and enhanced storage. The company can use annual turnover of the item to know how important it is to the overall performance of the business. There is no use buying more of a product that has low demand. For instance, a product may be cheap but its demand is high thereby more units are sold. It will be beneficial to the company to stock more of this cheap item than stock a more valued item that they can only sell few units in a year.
Demand management
Meeting customers’ demand and ensuring their satisfaction should always be the vital link in customer service. Demand management entails ensuring that there is right exhaustive and specific compilation of customer orders, orders are processed fast, items delivered on time and dispatch documentation processed. This will determine whether Ashley ward Inc wins customer confidence or not. Ashley ward Inc should also apply Safety lead-time policy when re-ordering their items to avoid effects of variations that may occur during transport, documentation, and supplier delivery. Ashley ward Inc can distribute items according to their batch sizes. In this case, customer service is never given much attention, the focus is on available stock and balance in forecast. Items are sent to their destination as scheduled no matter what happens to demand or supply (Wild p 227).
Stock level policy
Ashley Ward Inc. can use minimum stock level policy which when stock of an item reaches the company has to re-order. This helps take care of cases like delay in supply, client putting emergency order and help the company to arrive at just in time ordering thereby holding stock for a short time before getting to the next stage of the distribution chain. Having a stock at hand is another policy that ensures good customer relations. Stock at hand means that clients’ requests are met faster thereby increasing their loyalty to the company. These loyal customers can then refer other clients to Ashley ward Inc. The company can also rely on visual inventory control by workers constantly checking the level of the stock which if get to some level they re-order (Antony).
Ashley ward can use periodic inventory monitoring by comparing the available stock with the level of demand therefore re-ordering by use of this analysis. In some instances, Ashley ward Inc can employ perpetual inventory control policy by continuously monitoring level of stock. This normally help know the exact stock levels thus help the company in planning on how much to re-order and when (Wild p 247). There are a number of procedures used to control inventory. Ashley ward Inc. should not be allowing purchases without proper documentation to avoid cases whereby they are supplied with goods they did not order. The company should also ensure that they change over time safety stock level for items whose demand varies this helps avoid loses and maintain customer satisfaction (Edelman).
Works cited
Antony, D. “Procedures of Inventory Control System Management”. 2010.
Edelman, D. “Understanding Inventory Control”. 2010.
Wild, T. “Best Practice in Inventory Management.” 2 Ed. Oxford: Elsevier Science Ltd, 2002. pp 6-30.