The report discloses inventory and delivery problems in Trans-European Plastics (TEP), one of the biggest European manufactures of plastic household goods. The data given in the case study table 12.8 is used for the analysis. The recommendations and implementation plan for solution of the problems are provided. Problem StatementTrans-European Plastics (TEP) has more than 25 years of experience in this plastic production industry (Trans European Plastics Ltd, 2016).
The French division produces more than 500 products over Europe, including different bins, baskets, jars, baby baths, pots, tables, bag clips, mirrors, bowls, pegs, and other items. The company works in three shifts. Each of them lasts for 7 hours. The goods are produced on 24 large injection-moulding machines which can produce any items (Slack, Chambers, Johnsyon, 2010). The orders are delivered within 24 hours when they are receipted by an international carrier. TEP is successfully developing in the European market. The demand for its production is increasing with each year.
Thus, the European Marketing Manager notices that their “coverage of the market has never been so comprehensive” as they are “able to offer a full range of household plastics, which appeals to most European tastes” (Slack, Chambers, Johnsyon, 2010). Nevertheless, the company faces three problems which are interdependent on each other: delays in orders delivery, growth of finished goods inventory, and decrease in productivity. In spite of the fact that the Planning and Control office prepared a weekly production schedule for improving TEP’s performance, the company cannot provide their clients with a reliable delivery of goods for within one week, as it is planned. It has backlog for replenishment of the stock goods for about two weeks. Delays in delivery affect the company’s brand and give more opportunities for their rivals.
Besides, it leads to increase in transportation costs and inventory costs, as orders have to be sent by several batches or kept in the warehouse till whole order is fulfilled. Besides, TEP’s warehouse is overloaded with products. With references to Pierre Dumas, the production manager, TEP’s warehouse is fully filled with products. They are placed in all corners of the warehouse and it is difficult to say where and what goods are. It causes their damage during replacement, doublehanding, and shipping of other goods. The inventory can be lost or it can be expensive to retrieve them. As a result, the inventory costs and material losses from damaged or lost goods are growing. Finally, split-batches affect the TEP’s productivity. Since the company has no opportunity to reorder the products basing on two weeks’ average sales and there is no place in warehouse keeping new batches, employees have to produce only a part of a planned production batch in order to overcome immediate shortages.
The data analysis shows that the delays in delivery happen because the re-order system is not flexible and the number of machines cannot provide the required quantity of items per one week. First of all, the re-order quantities are established by the Estimating …