Question No. 06 Case Study on Fast Moving Goods (Attached) (10 marks)

Fast Moving Parts COMPANY HISTORY Fast Moving Company (FM) is a public trans- portation operator that was incorporated in the early 1990s in Boston. The mission of the com- pany is to provide a reliable, safe, and comfortable transportation service at an affordable price to the general public. To achieve the required service level.FM set up a maintenance department in the second year of its operation. Unfortunately, the maintenance department is having some difs- culty with parts inventory and availability. THE PROBLEM During a recent informal visit to the workshop, the managing director overheard a frustrated staff member complaining to his supervisor. He said that he had gone to four different storage ar- cas to collect the required material but managed to fill only part of the order because some items were out of stock. For some reason the material management system (MMS) showed sufficient items in stock. The managing director worried about recent steady escalation in maintenance costs and parts inventory carrying costs. He requested that the general manager of the maintenance depart- ment, Mr. Right, study these problems and sub- mit a proposal to resolve them. Mr. Right investi- gated and identified the following problems: 1. The materials management information sys- tem required manual updating. The staff of ten assumed the information in the system was up to date, when requisition vouchers were waiting to be entered. This time lag meant that the system showed inventory as available when it had already been used. 2. Most users withdrew more material than they needed so they could avoid stockouts. 3. Many users set up unofficial mini-ware- houses-just in case. 4. Warehouse staff were reluctant to use the computer-based system. The MMS could provide online system information, but re- sistance from the warehouse staff kept that part of the system from being implemented. 5. No records on material consumption were kept. 6. Users had to submit a material requisition form for items kept in each of four ware- houses and had to collect them personally. 7. Seventy percent of the maintenance costs came from materials QUESTIONS i Prepare a brief report in which you critically examine the inventory issues presented in the case. Recommend improvements for parts inventory management and mainte nance cost reductions, 2. At present, the chief supplies officer is in charge of purchasing and the warehouse. He reports to the assistant manager of adminis- trative support setvices. Mr. Right intends to appoint an integrated logistics manager to form an integrated logistics department un der the maintenance division to resolve the problems and to improve maintenance pro- ductivity. Do you think that Mr. Right's pro posal will work? Why or why not? Discuss this fully