From product assortment to inventory planning : Case: Company X
Jäämaa, Jenni (2018)
Jäämaa, Jenni
Lahden ammattikorkeakoulu
2018
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2018092315330
https://urn.fi/URN:NBN:fi:amk-2018092315330
Tiivistelmä
Level of internal profitability is a result from process management. Product assortment and inventory value have an effect on internal profitability.
Product assortment is the number and type of products that company provides to customers: wide of different products and depth of one product. Company has to evaluate its business model functionality and make strategic choices with customer and heading of business.
Logistics concept consists material and product flow activities from supplier to customer. Primary logistics activities are customer service, transportation, inventory management and order processing. Support activities are purchasing, warehousing, materials handling, production scheduling, packaging and information maintenance. In inventory management, lot sizing is an important issue. Sum of ordering cost and holding cost should be minimized. Production scheduling is conducted to ensure production of batches in planned time schedule. Product costing and inventory valuation depend on each other.
Process can be measured with key performance indicators. They can be used in evaluating critical actions and in progress towards long-term organizational goals.
This thesis is about improving internal profitability of an organization and it was made as a part of the project implemented in Company X. Goal of the project was to optimize the process and thus decrease inventory value. Project concentrated on product assortment and logistics activities: purchasing, production and inventories.
Process was investigated and many changes were conducted. Inventory turnover improved during this project, but not as much as hoped. Implemented changes give results gradually. KPIs are used to measure process performance in order to see whether improvements are taking place. Well-organized process decreases inventory value and increases profitability. Improvement of internal profitability requires commitment from everybody in the company. It is an ongoing process.
Product assortment is the number and type of products that company provides to customers: wide of different products and depth of one product. Company has to evaluate its business model functionality and make strategic choices with customer and heading of business.
Logistics concept consists material and product flow activities from supplier to customer. Primary logistics activities are customer service, transportation, inventory management and order processing. Support activities are purchasing, warehousing, materials handling, production scheduling, packaging and information maintenance. In inventory management, lot sizing is an important issue. Sum of ordering cost and holding cost should be minimized. Production scheduling is conducted to ensure production of batches in planned time schedule. Product costing and inventory valuation depend on each other.
Process can be measured with key performance indicators. They can be used in evaluating critical actions and in progress towards long-term organizational goals.
This thesis is about improving internal profitability of an organization and it was made as a part of the project implemented in Company X. Goal of the project was to optimize the process and thus decrease inventory value. Project concentrated on product assortment and logistics activities: purchasing, production and inventories.
Process was investigated and many changes were conducted. Inventory turnover improved during this project, but not as much as hoped. Implemented changes give results gradually. KPIs are used to measure process performance in order to see whether improvements are taking place. Well-organized process decreases inventory value and increases profitability. Improvement of internal profitability requires commitment from everybody in the company. It is an ongoing process.