Introduction
The Three Jays Company is a well-known manufacturer of jams and jellies that was founded in 1954 following the Korean War and begun by Jana Fremont in 2005. On August 26, 2014, Davis, the wholly owned subsidiary of Fremont’s jams & jellies, became called Three Jays Corporation (Marshall & Davis, 2014). Initially a contract manufacturer, Fremont Jam and Jellies creates a variety of jams and jellies from various fruits.
The corporation is currently attempting to expand its business through marketing strategies, but it spends significant money on in-stock goods. The president of Three Jays Company’s main difficulty is excessive inventory. Because of this, the inventory level is high compared to demand. The owner is updating the company’s EOQ and ROP. The company’s founder begins operations by processing locally grown fruits.
This report analyzes the Three Jays Company, specifically how operations management and EOQ benefit its operations, Brodie’s questions, the solution, the recommendation, and the conclusion. As a result, inventory management is crucial to the company since it will shorten the eight-week gap between manufacturing and two weeks of inventory level.
The jams and jellies made from the fruit come in the flavors of blueberry, strawberry, apple, mint, peaches, and cherries. The FJ&J products are incredibly natural and healthful. The business’s product line includes six different kinds of jams and jellies. These six varieties of jam and jelly are packaged in jars of four different sizes. The Three Jays Company straightforwardly makes jams and jellies. The entire raw material and ingredient mixture must be stored in one room before being further processed and measured following the cooking time limit. After this, the mixture must be moved to the kitchen, where the jam and jellies must cook for 20 to 25 minutes before being moved to a vacuum for 10 minutes (Marshall & Davis, 2014). The action is to make them taste the finished product and remove any bubbles that may have formed during the cooking process.
The Importance of Inventory Management in Operations Management
The Importance of Inventory Management in Business Plans
Inventory is one of the essential parts of any business plan. Business owners are always interested in effective inventory management, which can impact their business. While some business owners recognize the importance and necessity of regular inventory management, others need to recognize it, and their companies fall through the cracks. Maintaining the value of inventory management is especially important for e-commerce and online retail. Accurate inventory management allows brands to meet demand promptly and accurately (Slack et al., 2016). Business inventory management must evolve as a business grows (Jenkins, 2020). Companies with a strategic plan to optimize inventory management and monitoring processes, such as B.
Evolving Inventory Management with Business Growth
Inventory management, including actual statistics on inventory status and thresholds, accurate order fulfillment, inventory planning, order improvement, and increased customer satisfaction, allow for organized inventory and minimal financial resource blocks. A reliable merchandise management system allows companies to track inventory in their warehouse (Slack et al., 2016). No more inventory of understocked, overstocked, or obsolete items. Instead, the corporation should focus on establishing its brand as an industry leader and build a solid strategy to avoid incomplete orders, high return rates, and dwindling customer numbers with efficient accounting software. As a result, inventory management facilitates the planning and ordering of inventory items. Due to the orderly and proper inventory management system, Jays will have a complete overview of its current offers and increase customer satisfaction.
Enhancing Customer Satisfaction through Accurate Inventory Management
When customers become dissatisfied with shopping at a store due to “out of stock” or late delivery, they stop visiting the site altogether. However, effective inventory management speeds up order fulfillment and delivery to customers. Improved practices help online retailers and e-commerce companies build trust with their customers and keep them returning. A realistic inventory management strategy leads to a well-organized fulfillment setup (Slack et al., 2016). Warehouse organization increases the effectiveness of current and future fulfillment programs. Cost savings and improved product delivery are included for businesses using warehouses for inventory management (Jenkins, 2020). The primary purpose of inventory management is to reduce financial blockage. Unnecessary capital tied up in excess inventory is reduced, and the company’s liquidity situation is improved. Efficient inventory tracking solutions allow business owners to assess warehouse inventory more quickly.
The Role of Effective Inventory Management in Customer Retention
Small businesses can better manage their cash flow potential by planning and managing inventory levels. Due to limited financial resources, small businesses are rarely in a position to purchase large quantities of goods. As SMBs get better control over their inventory levels, they can accurately estimate how much inventory they need and when they need it. As a result, other company departments can start carrying extra cash. Inventory management and planning solutions enable small businesses to learn more about top-selling items. Due to this advantage, they can quickly and wisely change their product range and conduct business (Jenkins, 2020). Better business decisions inevitably lead to the development of small business profits. This advantage comes from our inventory only containing items for sale. If customers are not interested in another inventory, it may be abandoned and considered obsolete. Therefore, careful planning and inventory management make staff theft less likely.
The Use of Economical Order Quantity (EOQ)
Companies that follow EOQ take into account product demand, purchase discounts, storage costs, and all other costs associated with purchasing and shipping. Savvy business owners and managers recognize the difficulty in choosing the right purchases and inventory. If a supplier offers volume discounts or other incentives for large orders, EOQ can help determine where the line is drawn since it uses the Economic Order Quantity (Singh, 2022). Economic order volume is an essential factor for business sustainability because too much order volume leads to high storage costs and diverts resources from other business activities, such as marketing and research and development, which can lead to further increases in sales or reduced costs.
Economic Order Quantity determines the correct order quantity of each item a business must purchase.
EOQ calculations assume a relatively constant annual demand for the product. As a business grows, these numbers may frequently change, so it may be preferable to use an EOQ approach. After doing an EOQ, a company should know the ideal annual order volume and size to modify its EOQ model to consider discounts, backorders, and damaged goods. Based on EOQ results, a complete year-round supply chain ordering strategy is required. With an optimal EOQ, businesses can ship orders quickly, have products available when needed, or keep their customers happy when they need something for their purchase (Singh, 2022).
This action should improve customer satisfaction and increase sales by accurately predicting what businesses need and when they can avoid over-ordering and carrying too much cash inventory. More efficient order planning should reduce stale inventory levels, especially for businesses with perishable stock items that can lead to out-of-stock. If orders meet demand, inventory should be low. Businesses should plan and schedule their orders strategically to take advantage of the best volume or volume discounts their suppliers offer.
Conclusion
As the management gains experience with the new system, they will be able to reduce the eight-week gap between manufacturing a particular SKU and two weeks of safety stock. Second, sales forecasting needs to be improved for the future. The management can take three steps to complete this task. First, create long-term trends that reflect the expansion that 3Js has seen. To capture seasonal differences in sales, create a monthly seasonality index if it seems reasonable. With these methods, management can increase prediction accuracy while decreasing the amount of safety stock. Improved forecasting will lower stock-out probabilities and the amount of safety stock on hand. Thirdly, more unique, but the corporation should include identical-sized goods in each production cycle to improve control over a more comprehensive portion of the inventory.
References
Jenkins. (2020). What is Inventory Management? Benefits, Types, & Techniques. Oracle Netsuite. Web.
Marshall, & Davis. (2014). Three Jays Corporation. Harvard Business School.
Singh, J. (2022). Concepts of inventory and related technical terminologies: A literature review. Web.
Slack, N., Brandon-Jones, A. & Johnston, R., (2016). Operations Management, Pearson, (8th Edition). Web.