Executive Summary
This report was developed to provide recommendations for Hondwreck Partsheaven on how to resolve the issue of inconsistent inventory management and ineffective customer services. It has been identified that the automation of inventory management through the use of software is the optimal solution for allowing managers to focus on important processes. Moreover, information attained from research should be utilized appropriately; otherwise, it bears no value to the process of inventory management. As to the provision of high-quality customer services, it was found that Hondwreck Partsheaven should take into consideration the feedback provided by customers and make changes if they are needed.
Introduction
The modern society heavily relies on vehicles for completing everyday tasks. No matter what the task is, having a reliable car is essential. For this reason, the market of both OE (original equipment) and aftermarket parts has been expanding for decades to provide customers with trustworthy services and products that will restore the conditions of their vehicles or even improve it. However, because there are thousands of businesses that provide similar services, there is a need for optimizing operations and becoming more competitive in the long run. As one of the aspects of operations’ optimization, inventory control, and research has proven to be very effective.
Not having enough inventory can sometimes mean that businesses risk losing sales while too much stock is expensive and wasteful. Because of this, a business should be aware of how to avoid stockouts and overstocks, both of which can limit the overall operations in a company. The second aspect of operations’ optimization relates to the provision of customer services that will increase retention and help a business grow. Customer service is crucial because it is more often than not the only contact a client has with a company. When customers have any questions about a product or a service, they expect that the firm’s customer service department will resolve the issue.
Therefore, this research will raise two fundamental questions associated with workplace management and the optimization of the business process at Hondwreck Partheaven:
- How can Hondwreck optimize its inventory to avoid stockouts and overstocks?
- What procedures should take place to ensure the highest quality of customer services and increase of customer satisfaction?
Findings and Discussion
Inventory Management
The success of a product in the modern marketplace relies on the capability of businesses to successfully operate their supply chains. Among such capabilities, efficient supply chain management is essential for leading the global marketplace (Ozer n.d.). In its essence, the problem of supply chain management refers to matching the supply and demand of a product by effectively coordinating its production or distribution. It is crucial to note that the current advancements in the sphere of IT have presented businesses with vast opportunities to collect information regarding demand, capacity, available assets, and lead times (Ozer n.d.).
Consequently, a crucial point in inventory management refers to the use of information and effective research procedures that will help inventory managers decide what data should be collected, what products should be bought and stored, as well as in which information technologies to invest. For instance, a manager of inventory can obtain information about the progress of an order by using tracking technologies. If the acquired information is not put to use when making decisions about inventory replenishment, then neither the information nor the implemented technologies have any value (Ozer n.d.). Thus, there is no point in conducting research on inventory if the information is not being used for optimizing performance.
Issues in Inventory Management and Research
As mentioned in the introduction to the paper, issues that occur during inventory management can significantly hinder the profitability and competitiveness of a company. For this reason, an inventory manager should be aware of the issues that prevent his or her company from saving costs and generating revenue. A list of such issues and possible solutions that Hondwreck can implement is shown below:
- Lack of performance measurements. When there are no standards in place (e.g. measures of customer service, inventory turns, warehouse efficiency, etc.), there will be no cohesiveness in inventory management. A good place for an inventory manager to start is to develop a tracking of fill rate and inventory returns (Sutter 2015) for all products Hondwreck sells.
- Lack of employees’ qualification to manage inventory. Since businesses usually do not have enough time to halt operations and train personnel, the problem of low qualification can significantly increase the chances of poor inventory management. To resolve this problem, it is important for Hondwreck Partsheaven to hire professional inventory managers, hold them accountable, and put emphasis on training from the beginning (Sutter 2015).
- Lack of forecasting. This problem relates directly to inadequate research and usage of information. Without forecasting, it is impossible for businesses to plan for future stocks. To solve the issue, it may be recommended to make a shift towards automated inventory, a management system that will provide inventory personnel with real-time data so that they know which products are trending (Sutter 2015).
- Lack of automation. If Hondwreck is still using Excel or other manual processes to track the stock of automotive parts, it is wasting time and money. The problem is that manual operators do not work in real time and there is no option to allow several users to make modifications at the same time. On the contrary, and automated system will allow multiple employees to update stock, track different items across various locations while monitoring shipments and orders (Sutter 2015).
- Lack of actual inventory counts. This problem occurs when managers do not count physical items stored in warehouses and do not make sure that the numbers match those presented by software. It is crucial to check the levels of inventory in one section a day and the usage of a barcode inventory management system (Sutter 2015).
Just-in-time Inventory: Benefits and Risks
While some managers see just-in-time (JIT) inventory as the answer to all problems, others do not use it in fear of unreliable suppliers. Therefore, it is important to review the benefits and risks of JIT to determine whether Hondwreck can use this system for optimizing operations and increasing profitability. A JIT system of inventory management keeps the levels of inventory low and thus avoids overstocks. The use of the just-in-time inventory by Hondwreck Partsheaven can have the benefits presented below:
- The company will be likely to invest less money into inventory since less is needed overall;
- The company will only stock those products that are at a higher demand;
- Mistakes in inventory will be spotted and corrected more quickly (Bragg 2013).
On the other hand, it is important to account for the following risks:
- A supplier does not deliver the in-demand products in time;
- A natural disaster interferes with the supply chain;
- A company is unable to respond to the rising demand for a product.
Customer Service: How to Make Customers Come Back?
When answering the question about the procedures that should take place for ensuring the highest quality of customer services, it is crucial to remember that modern businesses operate in the technology-heavy environment that relies on the interaction between companies and their companies. For Hondwreck, whether customer remains satisfied with the provided products or services depends on how well the company assisted clients in making the right choice of a car part. In order to provide Hondwreck customers with immaculate services that will ensure retention, the following advice should be taken into consideration:
- Paying attention to first impressions. During workplace management, it is crucial to focus on how employees communicate with customers, how the company is portrayed online, and how the real shop/office looks (i.e. the overall presentation).
- Easy usage. Since Hondwreck has a website where customers can find and order car parts, the management should invest into making sure that the website is easy to navigate (Solomon 2014) and that it is bug-free.
- No questions remain unanswered. When it comes to effective communication with clients, the management at Hondwreck should make sure that customers do not ask questions to which the answers should be obvious while providing answers to all questions that may arise (Solomon 2014).
- Continuous education on customer service. Education is a profitable investment into the development of an organization, so there is no point for Hondwreck to disregard the importance of continuous improvement of customer services.
- Considering any feedback provided by customers as “free customer service consulting.” Information that goes directly from customers can benefit the way in which a company operates, so it is advised to review surveys, check the attitude of customers, and make changes in necessary.
SWOT Analysis: Inventory Management and Customer Services
SWOT analysis is an analytical framework that is used for businesses to determine their strengths, weaknesses, opportunities, and threats in order to develop and formulate the marketing strategy (Zahorsky 2016). The SWOT analysis presented below will pertain to the optimization of inventory and research as well as the provision of immaculate customer services in Hondwreck Partsheaven.
Strengths. Optimization of inventory through research and automation will allow Hondwreck to become more effective in reducing costs and increasing revenues. Among the key strengths can be the integration of inventory optimization software that will reduce the time managers spend on manually calculating the numbers of items left in warehouses and increase opportunities for demand and lead time forecasting, economic modeling, segmentation of inventory, or risk assessment (Hill 2015). With the implementation of effective customer services, Hondwreck is likely to increase retention and satisfaction that subsequently lead to the increased revenue.
Weaknesses. While the optimization of inventory can be beneficial internally, there is a tremendous risk associated with the reliability of third parties. Since Hondwreck does not produce automotive parts, there is a threat of suppliers not delivering products in time. Of course, reliance on third parties is something that no business can avoid, so it is crucial for Hondwreck to only cooperate with suppliers that will not disappoint. With regards to the provision of customer services, there a weakness in the lack of training of the staff, which is a challenge the company must invest into resolving.
Opportunities. Effective inventory management and research as well as the incorporating of effective customer services present vast opportunities for Hondwreck to increase revenue and cut costs. With the implementation of just-in-time inventory along with efforts to enhance customer services, Hondwreck is expected to gain new clients, retain existing ones, and foster relationships with reliable suppliers that only provide high-quality products. JIT will allow the company reduce its overstock and avoid understocks, ensuring that only the most in-demand products are stored in extensive quantities.
Threats. As with any other business, there is a threat of competitors having a more optimized supply chain and thus an enhanced inventory management process that allows them to be more successful compared to Hondwreck. On the other hand, competition is an opportunity for a business to grow and be more innovative when it comes to outperforming others (Papulova & Papulova 2006). Moreover, there is a threat from mobile apps developed by car repair businesses. These apps allow drivers to have access to the locations of the nearest repair shops, which radically eliminates the need for buying parts online. Hondwreck can also look into the development of similar apps to provide customers with more convenient options of shopping for car parts. As to the provision of effective customer services, no threats have been identified. However, it is always worth to invest into the assessment of employees’ performance when dealing with customers and to encourage clients to leave feedback.
Conclusion and Recommendations
In conclusion, it is important to state that adequate research and effective inventory control management present vast opportunities for a business like Hondwreck to become more successful, profitable, and competitive. The report has shown that the automation of inventory along with the implementation of just-in-time management are procedures that will help managers cut time they usually spend on unnecessary processes, allowing them to focus on the most beneficial aspects such as demand forecasting, employee training, economic modeling, as well as other performance improving tasks. The improvement of customer services for achieving customers’ retention and satisfaction rely on how well the company communicates with clients and whether it takes measures to cater to the popular demand. In order to be successful, it is important to think strategically what exact steps in customer service management can bring the most beneficial results. As found in this research, customers value first impressions and the fact that their opinions are valued, which suggests that Hondwreck should become more active in its efforts to provide existing and potential customers with immaculate services.
Overall, the report has shown that efforts to optimize inventory management and research as well as catering to the needs of clients when it comes to customer services can have a positive influence on how effective the business is in cutting costs and increasing revenue. It is recommended for Hondwreck to regard research, inventory management, and customer services as strategic tools that can be implemented for growth and expansion. Since the demand for car repair parts is always present, the company chosen for this report can use the outlined recommendations to become more proficient in the optimization of its performance.
Reference List
Hill, A 2015, 12 best practices of inventory optimization.
Ozer, O n.d., Inventory management: information, coordination an rationality.
Papulova, E & Papulova, Z 2006, Competitive strategy and competitive advantages of small and midsized manufacturing enterprises in Slovakia.
Solomon, M 2014, 20 expert customer service tips to try right now.
Sutter, B 2015, 5 common inventory mistakes and how to avoid them.
Zahorsky, D 2016, SWOT analysis: a small business owner’s secret weapon.
