Operating in the primary sector, the company execute both Business to Business and Business to consumer process. Their main focus is satisfying the physical and psychological needs while delivering excellent customer service and quality products. Technology is a driving force impacting the way companies transact businesses. This report examines the JIT method and implications if such system is adapted by the company.
The company believes in efficiency and reliability, at no point should resources be out of stock. As defined JIT is “a Japanese management philosophy applied in manufacturing which involves having the right items of the right quality and quantity in the right place and the right time” (Kootanaee1, 2013). Being the sole importer for brands such as Intimate, Emami and ICL the company creates their value proposition by purchasing in bulk. These items are bought for resale to other businesses and walk in customers. The suppliers and manufacturers are geographically located beyond the borders of Guyana mainly Trinidad, USA and India. Based on the traditional method of buying and storing goods has proved to be a well strategic approach in terms of inventory holdings.
“Good purchased in bulk guarantees Economies of scale” (Singh, 2018). This allows the company to be cost effective. Once an order is placed with the supplier, they are basically transported by sea in large containers. Depending on the location or country of origin, it can take up to 3 months until goods are received. There is a special formality for countries of export example, India starts manufacturing upon receipt of part payment on invoice (Smith, 2018).
JIT practice does not apply to all items stocked in the company’s storage. Everyday essentials including water, juice, milk and toiletries are ordered using JIT method. However, JIT is not applicable to inventory for resale.
If the company incorporate JIT practices when purchasing inventory they can benefit from:
• Reduction in expired items- as a result of bulk purchases, the bond is overstocked with items expired or near expiry date. This is because of an inconsistent reorder level and a change in demand for a particular product. JIT would eliminate this catastrophe reducing the overall expense.
• Avoid outdated products- with rapid changes with technology and research ; development. Ever so often, new product offerings with better quality and at competitive prices enters the market. Customers would eventually switch to the new product. JIT will allow management to monitor the purchasing trend and placed items based on demand.
• Eliminates room for pilferage- having too much inventory stored in the bond can tempt petty thieves. Staff may not feel threatened if risk is taken due to excess quantity.
• Allows for small investment- JIT is ideal for Perfumes Guyana mainly because they are not financially stable at all times to make bulk purchases. This would allow the company to stock the least amount rather than no stock at all.
• Less space needed- small quantity of products requires adequate space to store goods reducing security cost to overlook the warehouse, reduces insurance cost also, damages. This would also provide additional retail floor space.
However, JIT inventory management can have an adverse effect on the company’s operations, such as:
• No discount- the company would be unable to take advantage of exciting opportunity because insufficient quantity was ordered.
• Reduction in sales- due to fluctuating demand and supply, an item may be a fast seller seasonally but only limited pieces available resulting in stock shortages.
• Increased pricing- buying minimum quantity will result in price increases for the items. This will affect the business, most of the company’s customers are price sensitive.
Reasons why Just in Time is not practiced in the company are:
• Geographic proximity of supplier- limits the potential for achieving JIT deliveries because of the transport timing.
• Supplier reliability- should an order be placed immediately for the earliest delivery is not guaranteed. Manufacturer may not have raw material, factory breakdown and strikes.
• Little or no reorder level- orders are placed without calculating inventory level. This may result in stock out since it is based on assumptions (Rampershad, 2009). (677 words)
CHAPTER 1 (B)
With reference to Hofstede (1981), discuss how national cultures might influence how the workforce is managed within your chosen organization. (20 marks – 700 words)
Perfumes Guyana is characterized by low profit margin, minimum waged and semi tedious jobs that demands customer interaction constantly (Doerga, 2016). Loyal employees and low staff turnover results from practices of Hofstede’s culture dimensions and as such this report examines each culture as it relates to the company.
Each employee is considered the company’s most valuable asset with a unique set of personal and work-related experiences, strengths, weaknesses and career goals. (Hofstede, 1984) Defines culture as “the collective programming of the mind which distinguishes the members of one group from another” at the same time influences the values within the working environment. Culture can be learned and developed through constant interaction with no written rules or law to dictate how it should perform. According to (Hofstede, 1980), there are several dimensions existing within an organization such as high versus low power distance , individualism verse collectivism, masculinity versus femininity and high versus low uncertainty avoidance.
Collectivism vs Individualism explained by (Ghauri, 2003) is “the relationship between an individual and his/her fellow individuals, the collectivity which prevails in society”. An experienced business coach (Smith, 2017) emphasized that team work is “together we achieve more” this can be seen vividly in the company’s culture. Collectivism is morally embedded within the company’s operation with staff working together in moving the company closer to its goals. Employees value relationship and feel motivated with guidance and support from fellow colleagues. This kind of cultural dimension is healthy for overall success since each staff job description can only function effectively with corporation from their immediate coworkers. The distribution department collaborates with sales and warehouse team to ensure customer orders are prepared and delivered as promised. As a team, they are willing to take risk since member supports each other should there be any failure. Collectivism eliminates competition, hatred and spitefulness among team members while promoting harmony and a friendly working environment. Appraisal are conducted quarterly recognizing the committed and achievement of the team’s contribution towards success from brainstorm storming sessions prior to marketing campaigns.
Power distance dimension expressed by (Insight, n.d.) is “the degree to which the less powerful members of a society accept and expect that power is distributed unequally”. Perfumes Guyana organizational chart with a short hierarchical ladder is vividly displayed in an open area visible to all staff. Each staff are aware of their list of duties and whom they should report to in terms of superiority. Ownership, responsibility and accountability are key characteristics of each member on board. The internal operations proved that a high degree of power distance exist mainly because managerial positions are highly acknowledged and respected. Junior staff generally accepts power inequality and feels comfortable and believes that it is appropriate. Concerns and dissatisfactions among staff are raised with superiors through a WIFLE (What I feel like Expressing) sessions weekly. This involves management listening and addressing issues arising such as poor working conditions, favoritism or other minor issues that may arise from time to time.
Uncertainty Avoidance explained by (University, 2009) is “the extent to which a society, organization, or group relies on social norms, rules, and procedures to alleviate the unpredictability of future events”. Decisions are made solely by management after intense research and analyses of data gathering. Striking with strong uncertainty avoidance, the company is risk adverse since management dislikes and feels uncomfortable with unpredictable happenings. This sense of insecurity demanded the need for manual and systems to be implemented guiding staff to ensure activities are well executed in accordance to management strategic plans. There is no room for failures and mistakes, management sees that as a threat towards the company’s success for example, the company utilizes Facebook to build awareness and communicates its brand message to the target audience. However, recently the marketing department was approached by a television network sales representative trying to persuade management to utilize their station to channel its message to a wider geographic area. Because of risk adversity, the opportunity was lost. From past experiences with television stations, no fruitful results yielded from ads and promotions channeled through that medium.
Masculinity versus femininity is understood that women are more service-oriented and caring for others especially the weak. They value relationships and people before money, develop and maintain quality of life and preserves the environment contrary to masculinity traditions men take the more assertive and dominant roles. These values include the importance of showing off, achieving something visible and making money (Hofstede, 1983). Perfumes Guyana falls in the femininity line where both men and women execute different roles. The CEO is currently a female, being authoritative and delegating duties and responsibilities to a male manager. This company thrives on customer service, and as such both male and female are constantly trained in areas such as sales and services to provide that exceptional feeling (801 words)