Scientific Glass, Inc.

:
Inventory
Management
BY: GROUP 3J
SHIVANGI

SECTION 3
2016PGP176

SUMAN

2016PGP180

EKSHAN

2016PGP145

KUNAL
VINAY

2016PGP155
2016PGP184

Company Background

Private, midsized company founded in 1992

$86.3 million in net sales

3,000 standardised product plus custom glassblowing services

$6.5 million in net earnings

ISSUES

The companys compensation program to achieve 99% customer fill rate made most of
the warehouse managers to keep higher inventory levels than required. The policy of
99% fill rate is a point to be considered while 92% being the industry standard. Moreover,
the companys inventory control policies to not to exceed 60 days supply are also
regularly violated. All these aspects are affecting the companies plan for international
expansions and companys target debt to capital ratios are increased to 40%.

A centralized inventory monitoring and recording system at Waltham warehouse was not
enough to capture the inaccuracies caused by damaged, lost, and stolen goods, human
errors led to the mismatch between the computer generated record and the actual
inventory. Salespeople regularly asked warehouse managers to perform manual inventory
checks but the time required to track it down, and the time and cost of the interwarehouse transfer, absorbed much of the profit from the sale.

Option available

Continuing with 8 warehouses

One central warehouse

Two centralized warehouses

Outsourcing the warehousing functions

Proposed Policy Changes

Greater enforcement by the warehouse managers of maintaining only

sufficient inventories in the warehouses to meet the companys target
fill rate of 99%.

Discontinuation of the practice of allowing sales people to maintain

trunk stock.

Creation of daily reports and weekly summaries on inventory

movements for every warehouse

Periodic physical audits and control procedures for all warehouse

stocks.

Recommendations

Based on our evaluation of this case the outsourcing seems to be the

most efficient options due the following parameters:

Lowest inventory cost

Negligible warehousing operation expenses.

No SG managed Inventory

Better fill rate at lower cost

Insurance cost borne by the Global Logistics

THANK YOU!