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Supply Chain And Inventory Management: Planning

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Discuss about the Supply Chain and Inventory Management for Planning.



Capacity Planning: 

Capacity planning in operations management is defined as the planning of operation with best possible output as per the availability of resource and the demand of the customer in any industry of service or goods sectors (Managementstudyguide, 2015). 

Factors of Capacity Management for Call-us Plumbing: 

Three factors of capacity planning considered for Call-us Plumbing Supply company are:

  • Workload- Determination of workload input through summing up of all the work allocated for the satisfaction of users with the best possible effort to ensure even load of work.
  • Service level- Service level is linked with the workload of the system capacity with ensuring a higher level of service for any specific workload by higher level of capacity.
  • System Capacity- This is to plan any job with present possible fixed capacity with further determination of the need of capacity level in future in order to meet specific upcoming workload and service factors(Markgraf, 2016).

Capacity or Production Planning Strategies:  

Three capacities or production planning strategies are:

  • Long term capacity- long term capacity of any organization is depending upon different capacities as design capacity, production capacity, sustainable capacity and effective capacity.
  • Medium term capacity- medium term capacity is for medium period with the preferred span of 2 to 3 years of time frame with the strategic priorities of capacities like ability and execution capacity.
  • Short term capacity- This short term capacity is defined as regular strategic plans undertaken by the organization in order to ensure execution of objectives for daily, monthly or quarterly time frame(Managementstudyguide, 2015). 

Capacity Planning Strategies for Call-us Plumbing: 

 Three strategies of production planning for general manger of Call Us Plumbing company as per time frame:

  • Long term capacity- In order to enhance long term capacity of the company, the general manager should insist on trend of change of customer’s behavior in respect of quality of material and service. The general manager has to introduce upgraded module of production capacity through deployment of skilled labors, design capacity through introduction of latest technological development, sustainable capacity through foreseeing of the business and its changed trends in future and effective capacity through training of existing labor to cope up with the changed demand of the users.
  • Midterm capacity- To ensure enhancement of midterm capacity, the general manager should insist on the upcoming latest development of the technology in near future and be equipped with products and services for complying with them.
  • Short term capacity- To ensure short term capacity the general manager has to follow the normal execution level as per demand of the users with proper planning of products and services for them(Mathers, 2017). .

Reasons to keep a Supply of Inventory: 

Two basic objectives of keeping inventory by any company are determined by motives of the company which are:

  • Transaction Motive-The Company is required to keep inventory to facilitate the uninterrupted operations process regarding production and sales as it is not possible for the company to procure the raw materials for production process whenever it is required.
  • Precaution motive- The company has the objective of holding inventory in order to prove sustainability related to inventory management in case of unanticipated situation of non- availability of raw materials due to situation beyond control(Careerride, 2015). 

Distinguish Between Fixed and Variable order Inventory Management System: 

Fixed order inventory management system is management of such inventory system which is done for a specific item of inventory is to be ordered at a specific time (Businessdictionary, 2014). 

Variable period inventory management system is management of such inventory system which is done for variable items of inventory which is to be ordered at variable time as per requirement or availability.

Distinguish JIT and Kanban: 

 Just in time is the inventory management system related to materials management which can have the ability for enhancement of efficiency with decrement of waste by receipt of goods only when they are required in the manufacturing process and thus it reduces inventory costs. Example of JIT inventory management system is fast food chain of restaurants where the raw materials are procured only when they are needed (Investopedia, 2016).

Kanban is a Japanese terms used to describe the inventory management system which allows the companies to make arrangement of stock for the required elements in the manufacturing process. The example of this system is the inventory management followed by automobile industries (Marion, 2016). 

Management Inventory Management Tools: 

Recommendation for four management inventory tools for Mr. Swartz:

  • Barcode data collection- This is applicable for perpetual inventory system which requires reporting of inventory in accurate and timely manner. As manual reporting can be affected by human errors, delays, missing information and unexpected burden on workforce, this system can mitigate those with perfect and efficient reporting of inventory system.
  • Cycle counting- importance of inventory accuracy plays a vital role in efficient planning and control over inventory which can be ensured through implementation of cycle counting. This system ensures periodical counting of inventories of higher importance with more frequency than inventories of lesser importance.
  • ABC analysis- This instrument of inventory system, also known as Pareto system of analysis is to ensure ranking of all inventory items as per the total value of every item in an annual basis with prioritizing by identification of importance of items as per their role in the production system.
  • Lot tracking and traceability in addition to inventory tracking system, emphasis is to be given on the genealogy, nomenclature, history of configuration and product performance data which is basic requirement of value addition in the aspects of engineering, servicing of product, provisioning of spare parts and other related areas of any business. Lot tracking is essential for this purpose which enhances the scope of financial control with basic management processes of business (Myob, 2016).   

Supply Chain Management: 

Supply chain management for FMCG products in New Zealand with respect to different steps of operation management like planning, procurement, processing and distributions are:

  • Planning- Planning of supply chain is to be made on the sales forecast of domestic and international market through proper market research in order to cater target audience and subsequent strategies to minimize waste.
  • Procurement- Procurement of raw materials is to be done as per the production plan which is depending upon sales forecast. The main objective is to minimize inventory holding to adopt Just in Time Inventory management system to mitigate the scope of wastage of raw materials.
  • Processing- processing of supply chain is to ensure that after production, the items are to be processed through proper system by inventory management of finished goods in order to ensure their disposal by shelf life of the products.
  • Distribution- Distribution of finished goods is targeted to the customers of New Zealand and overseas incase of such existence. Distribution of domestic market is to be done as per the normal trend of distribution-company->Distributor-> retailer-> end user. The consideration of shelf life is to be taken into utmost consideration because that will be instrumental for mitigation of wastage and proper use of working capital. 

Reasons to keep Supply of Inventory: 

Two basic reasons for keeping inventory by the companies are to their motives towards inventory of raw materials: transaction motive to ensure flow of raw materials for production process and sales and precautionary motive to hold inventory in case of unavoidable situation.

Current Trends in Supply Chain Management: 

Six current trends of supply chain management are:

  • Start of demand planning at the end of the cycle- Due to increment of source and capacity of manufacturing, the companies are moving away from the focal point of efforts on plant-level manufacturing planning with the adoption of more demand-driven focus which can try to influence demand with more efficient management to reach objective of supply chain management. 
  • Globalization- globalization of business has introduced new trend of supply chain which ahs global impact with varied level of supply chain associates with localization of global business.  
  • Fierce competition with price constraint- Fierce competition with price restrictions for buyer driven market generates the necessity of new trend of supply chain to cope with demand of the companies for price efficient and competitive products. 
  • Outsourcing- As the information technology and systems are improving, scope for outsourcing is growing faster in order to ensure global production, distribution and product designing. 
  • Short-end and more complex product life cycles- to ensure demand of the market with products of such categories. 
  • Collaboration between extended supply chain associates- In order to ensure prudent and transparent business model of the professional companies. 

Supply Chain Strategies: 

Four supply chain strategies:

  • Segmentation for differentiated, profitable relationship with customers.
  • Driving the supply chain from real demand to understand the need of the end user and provides materials accordingly.
  • Ensure synchronization by providing visibility to be aware of the objective of supply chain for ensuring success.
  • Optimization of available resources through circular economy(Perez, 2013). 

Capacity and Inventory for Call-us Plumbing: 

With the provided information and resources for Call Us Plumbing Supply Company, the company should follow the route of supply chain strategy which is improvised by circular economy.


As per market research done on XYZ Food chains Ltd, it is found that the company is following capacity control in operation management effectively by exercising long term, middle term and short term capacity. Inventory which is maintained as per Just-In-Time Module and the supply chain management as per latest innovation of circular economy.

Strategic Solutions: 

To improve performance management, Call Us Plumbing Supply has to keep proper track of inventory, ensure supply chain as per the guideline of circular economy and follow the capacity control of operation management as per requirement set by the customers. 



Businessdictionary. (2014). fixed order quantity method. Retrieved May 15, 2017, from Businessdictionary:

Careerride. (2015). What can be a company’s motive for holding the inventory? Retrieved May 15, 2017, from Careerride:

Investopedia. (2016). Just In Time - JIT. Retrieved May 15, 2017, from Investopedia:

Managementstudyguide. (2015). Capacity Planning. Retrieved May 15, 2017, from Managementstudyguide:

Managementstudyguide. (2015). Capacity Planning. Retrieved May 15, 2017, from Managementstudyguide:

Marion, G. (2016, October 09). Small Business Supply Chain - What is Kanban? Retrieved May 15, 2017, from Thebalance:

Markgraf, B. (2016). Three Key Inputs to Capacity Planning. Retrieved May 15, 2017, from Chron:

Mathers, B. (2017, March 21). Capacity planning guide. Retrieved May 15, 2017, from Microsoft:

Myob. (2016, June 20). 5 tools for inventory management. Retrieved May 15, 2017, from Myob:

Perez, H. D. (2013, March 06). Supply chain strategies: Which one hits the mark? Retrieved May 15, 2017, from Supplychainquarterly:


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