Automotive Used Parts Industry
Each model associates with the development of new automotive technologies thus making it easier for the new car buyers to save massive amount financial resources. Inventory management relates to the specification of shape and percentage of stocked goods/automotive used-parts. . Inventory management refers to a collection of interrelated processes with the inclusion of a full cycle from supply chain management to demand forecasting, through inventory control and reverse logistics. Effective inventory management would focus on the determination of the amount of time relevant for the transfer of the products to their respective places for the purposes of sales.
Inventory Management in the automotive used parts industry
Introduction
Each model associates with the development of new automotive technologies thus making it easier for the new car buyers to save massive amount financial resources. According to the information by the Purchasing & Procurement Centre (2013), inventory management offsets and ends with the concept of supply chain management because of the inclusion of numerous opportunities. These opportunities are essential in the improvement of effectiveness and efficiencies staring with shortening order to receipt time with the aim of not incurring additional cost of operations and distribution of automotive used-parts. This illustration focuses on the inclusion of four critical stages: supply chain management, inventory control, demand forecasting, and reverse logistics (Chou et al., 2012). It is essential to note that, if an organization overbuys transmissions to dismantle and sell the cores; internal and external pieces of the transmissions, but the market for one of its largest selling inventory line becomes oversaturated in the marketplace, the product will eventually become less worthy than scrap prices. Importation of the automotives in the context of China increased by 35% to stand at $10 billion in 2010 as a reflection of developing globalization.
It is also vital to note that the market fluctuates continuously throughout the year because of implications of various factors such as weather, production, and quality control. In this research exercise, the focus will be on the illustration of the four critical stages of inventory management with reference to the automotive used-parts industry. The second objective of the research exercise will be on the examination of the influence of the market, weather, production, and quality control on the sales and inventory management within the automotive used-parts industry (Jaber, 2009). United States’ automotive used parts industry exports recorded an increase of about 36.2% to stand at $58.1 billion in 2010 in comparison to $42.7 billion in the previous year. In 2010, the United States recorded about $32.8 billion as part of trade deficit from low levels in 2009 (61.3% increase).
Inventory Management in the automotive used parts industry
Inventory management relates to the specification of shape and percentage of stocked goods/automotive used-parts. This concept is essential and applicable in different locations within the facility in relation to supply network. The scope of inventory management focuses on the inclusion of various factors such as:
Lead time
Costs of inventory
Asset management
Inventory forecasting
Inventory evaluation
Inventory visibility
Future inventory price forecasting
Physical inventory
Available physical space for inventory
Quality management
Returns and defective products
Replenishment
Demand forecasting
In order to achieve essential and effective concept of globalization thus operating in higher or wider environment with reference to the automotive used-parts industry, it is ideal for the organizations to focus on the accurate and adequate balancing of the above competing requirements. Most of the exports of the United States in this industry go to Canada, Mexico, Japan, and European Union zone. This will lead to optimal inventory levels thus shifting to the global aspect in relation to maximization of revenues and profits with the aim of achieving competitive advantage. Inventory management refers to a collection of interrelated processes with the inclusion of a full cycle from supply chain management to demand forecasting, through inventory control and reverse logistics.
Supply Chain Management
Inventory Control
Reverse Logistics
Demand Forecasting
Inventory management starts and ends with the concept of supply chain management because of numerous opportunities towards the achievement of effectiveness and efficiency in the production and distribution. Despite this notion, it is essential to note that other stages of inventory management have critical importance towards the achievement of overall efficiency. In the context of a perfect world, it is vital to note that all inventories are consumed daily. Unfortunately, business entities usually operate in a less than perfect environment. The main challenge facing business organizations is: how to attain the state of perfect before it becomes late to implement inventory management to enhance the situation. Various industries and organizations adopt and implement unique such as cost of goods, customer managed inventory, and inventory turnover. This is because of the unique needs and objectives by organizations and industries (Glock et al., 2013).
Automotive used-parts industry is one of the unique industries across the globe adopting and implementing inventory management with the aim of achieving efficiency in the services and product manufacturing and delivery. In order to achieve overall efficiency, it is ideal to implement effective inventory management. Effective inventory management relates to quality grasping of all details in relation to inventory management. This relates to application of lean practices with reference to inventory management cycle in order to eliminate or reduce investment in standing inventory, reverse logistics, and shipping costs while maintaining or enhancing customer service levels. This is an indication that effective inventory management focuses on appropriate implementation of available information with the aim of enhancing the outcome (Mercado, 2008).
Another aspect of inventory management in the context of automotive used-parts industry is overseeing constant flow of units into and out of the existing market effectively and efficiently. This relates to the motive of controlling transferring of automotive used-parts with the aim objective of eliminating surplus of the inventory. Failure to manage inventory effectively would result into dwindling of the inventory thus putting the operations of the organization in jeopardy. Competent inventory management focuses on the control of costs in association with the inventory. This relates to the total value of the products included and tax burden under generation through cumulative value of the inventory. Importation of the automotive used parts amounted to about $90.9 billion in the context of the United States as a reflection of improvement of 44.3% from the previous year.
In balancing various tasks with reference to inventory management within the context of automotive used-parts, it is vital to focus on three critical aspects of the inventory. In the first place, organizations within this industry must focus on time in order to prevent surplus of their products into the market thus affecting the operations of the business entity in relation to the achievement maximum profits and revenues. The organization must determine the time for the suppliers to process an order and execute the delivery adequately in order to evaluate the process of acquiring materials for the inclusion of total delivery. Effective inventory management would focus on the determination of the amount of time relevant for the transfer of the products to their respective places for the purposes of sales (Ben-Daya et al., 2013). This information is essential in the achievement of two goals: determination of when to place an order and enhance smooth running of the business with reference to production and distribution.
Another critical aspect of inventory management is the examination of the buffer stock. Buffer stock refers to the additional units beyond the minimum number essential for the maintenance of production levels. For instance, organizations within this industry might decide to deploy one or two plants to curb any uncertainties within the operating elements thus enhancing eventuality of production and delivery to the market. This will enable the organization to withstand any failure of essential parts of the operation supply inventory thus aiding maximum and consistent production and delivery to the market. Another critical aspect of inventory management for the minimization of losses because of surplus in the market is effective documentation of the raw materials and movement of the products. It is vital to document records of those materials as they move through various stages of the operation for the purposes of minimizing errors or wastes in the production and distribution processes. This will also include returned products in case of implemented product-return policy. Accurate documentation of the details in relation to the movement of the materials through stages of inventory ensures that the organization has the opportunity to display information to sales personnel with reference to what is available for transportation (Chin et al., 2012).
Proper timing, effective calculation of the buffer stock and adequate documentation of the movement of the used-parts within the automotive industry is a reflection of the need and perspective of minimizing errors or wastes by relevant organizations across the globe. This is because of the opportunities to enhance effectiveness and achieve efficiency within production and distribution processes. This will ensure that supply of the used-parts for the global automotive industry and finished products remain continuous thus lack of uncertainties to the demand and production process. The organizations within the industry will focus on the minimization of the cost of carrying inventories hence the opportunity of keeping inventory levels at the optimum. The other benefit of the three critical aspects of inventory management relates to the reduction of wastes due to shortages or surpluses within the market and global industry.
How the markets can make a difference in the sales and inventory management of these parts
Markets are essential in the making of a difference with reference to sales and inventory management of the automotive used-parts industry. This is because of the continuous transformation and developments of the modern and modern economy towards addressing the needs and objectives of various organizations within the industry. The main objective of inventory management is to satisfy the needs and preferences of the consumers. This is through addressing their requirements thus maximization of the profits and revenues at the end of the financial year. Automotive used-parts industry is a global concept thus application of great influence on the aspect of inventory management through various players across the globe. Changes within the markets, globalization, and adoption of new techniques are essential in the implementation of quality and effective inventive management. This is because of the need by organizations or business entities within this industry to adopt and implement an efficient inventory management with the aim of curbing new consumer demands and changes across the globe (Niranjan et al., 2012).
There are constant changes in the market thus the need for integration and incorporation of an effective and efficient inventory management to track the movement and events within the global and internal markets for any changes. This is essential for the minimization of losses by business organization because of the opportunity to plan and implement its strategies effectively and appropriately. Market changes will also determine on the amount of products to be delivered in the market. In case of high demand, the organizations within automotive used-parts industry will adjust their inventories to match the changes in the market thus constant rate of production and distribution of the products to the market. This is an indication that changes in the market will enable an organization to adjust its inventory management concepts while focusing on time, documentation, and research and development for the improvement of services to the consumers within relevant markets.
How weather can make a difference in the sales and inventory management of these parts
Weather plays a critical role in relation to the inventory management of the automotive used-parts industry. This is because of affecting supply and delivery of products to the preferred and desired destination in the process of marketing. It is also essential for the organization to focus on quality management of time thus addressing variation in weather conditions. Adverse weather conditions such as floods cause massive destruction to properties and products thus limiting supplies to the organizations operating within the context of automotive used-parts industry (Syntetos et al., 2012). This is because of the adverse implications on the movement of the products to the market and areas of manufacturing. This will force the organization to adjust its inventories with the aim of retaining the rate of manufacturing and distribution of the products in order to address the needs and preferences of the consumers within the global markets. Most of the products within this industry are bulky thus travel either by ship or trucks. In case of transportation by tracks, it becomes difficult for the supplies and products to reach their destination during adverse weather conditions such as floods. Weather conditions also affect demand and preferences of the consumers.
This will cause the demand to increase in case of favourable weather conditions and to fall during adverse weather conditions. Organizations within the automotive used parts industry will have to adjust their inventories through effective and efficient management with the aim of curbing weather changes across the globe. This makes it critical for the organizations to keep vital records on the weather pattern on various parts of the globe or marketplaces with the aim of minimizing the losses due to shortages or surpluses in the context of the market and industry of operation. It is also ideal for proper timing in order to avoid implications of adverse weather conditions because of the massive losses. This is through adopting effective infrastructures at strategic places across the globe with the aim of addressing various needs and preferences of consumers within the market (Wadhwa et al. 2009).
How production can make a difference in the sales and inventory management of these parts
Production is a vital aspect of inventory management thus an essential concept for the organizations operating under the automotive used-parts industry. Production levels are influenced by the forces of demand and supply thus the need for adoption and implementation of an effective and efficient model for the purposes of managing the inventories of an organization appropriately. Production levels should focus on the examination of the patterns in the markets and variations of the weather conditions. It is ideal for the organizations operating in this industry to adopt and implement various strategies with the aim of making production consistent, successful, and adequate to curb diverse needs and preferences within the market of operation. Production also affects inventory management of the automotive used-parts industry because of the implications of demand and supply by the consumers and suppliers. Production levels will determine the volume of raw materials or used-parts applicable for the purposes of manufacturing and delivery to the market. This is production critical for the purposes of timing and consumers retention (Jaber et al., 2013).
Production requires application of effective and efficient research and development in relation to the needs and demands of the consumers. This is because of the opportunity for the organizations in the market and industry of automotive used-parts to maximize revenues and profits at the end of the financial year. It is also adequate for proper planning in case of maximizing the production levels and available capacity within the aim of minimizing losses and wastages during distribution. Production will also determine the volume of the plant for the purposes of maximizing available opportunities within internal and international markets.
How quality control can make a difference in the sales and inventory management of these parts
Quality control refers to the procedure or set of procedures essential in ensuring that the manufactured products or services adheres to the defined quality criteria within the industry thus an opportunity to focus on meeting the requirements of the clients or consumers. It relates to the concept of quality assurance. In the achievement of an effective and efficient quality control within the automotive used-parts industry, it is essential for the organizations to determine the desired standards for the products. It is vital for the organization within the industry to collect and implement findings of an effective research exercise in relation to the needs and preferences of the consumers.
Quality control will enhance inventory management of the automotive use-parts products thus an opportunity to direct production in line with the demands of the consumers. This is an indication that quality control will determine the quality and quantity of the production levels within the organization thus an opportunity to eliminate wastes during manufacturing and distribution processes. Quality control will affect inventory management because of its focus on the concepts of timing and documentation. These two aspects are critical towards the achievement of goals and objectives thus an opportunity for the improvement of the profits and revenues during the financial year (Silver et al., 2011).
Conclusion
Inventory management is an essential component in the minimization of losses and achievement of efficiency in the production and distribution of products within internal and international markets. There are four critical stages in relation to inventory management in any business activity or necessary. These critical stages of inventory management include supply chain management, reverse logistics, demand forecasting, and inventory. Despite the fact that supply chain management is the main aspect in the achievement of efficiency in the manufacturing and distribution processes. In order to manage operations of an organization effectively and appropriately, it is essential to implement quality measures in relation to three critical aspects of inventory management. This is an indication that effective inventory management focuses on timing, documentation, and research and development. This will enable the organization to implement and utilize available information with the aim of minimizing wastes and losses because of surpluses and shortages.
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