Stock-Out: A Major Challenge for Tea Company T2 - Essay Sample

Introduction

Companies face different challenges or issues from the production unit until the distribution of commodity happens. Product stock-out is a significant issue experienced in T2 company which is a tea company. Product stock-out is a situation when a particular product is not available in the stock for purchase by customers. It causes a lack of satisfaction in customer, lowers the business efforts of the employees, loss of sales and a miserable future of the business. When a buyer finds that his/her commodity of choice is out of stock, he/she might choose to buy a substitute item, find the item from another company, postpone the date of purchase or decide not to buy the commodity (Monczka et al 2015). This can make those buyers who are already customers to search for other better sources of the item and hence losing customers who may even not come back after the missing pieces are brought in stock. In our case as a tea company when this may occur, our customers may migrate to other tea companies who are always our competitors. This can bring a significant challenge to the company because the customers have been modeled and matured in the company, but the benefits are taken to another company.

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The situation may be caused by poor planning or management of the inventories, peak demand unseasonally and reduced supply from the supplier due to the product shortage in the market. It is advisable to order for the stock early and order it in a reasonable amount where it can last for a relatively more extended period, or else mismanaging of the inventory will be experienced (Hugos, 2018). Minimizing the stock-outs without a well-set idea or plan may be very difficult or expensive either by time, labor or even resources. However, one must understand all the possible causes of product stock-out.

Solving the stock-out issues, it requires the implementation of advanced IT solutions in supply chain management. A proactive system for inventory management should be implemented to enhance accuracy and efficient track of inventory. The system should indicate alerts or warning messages when an item is about to be out of stock.

Why it is Critical to Implement the Proposed Strategic Plan

Point of sale system is the best option which can monitor the inventory using the data which is collected during sales and purchases. The system is automated and hence reduced labor. At this stage, the calculations of the selected items are done, and also payment in exchange for goods is processed where a customer may be given print outs. i.e., a receipt. Scanners and weighing scales are mostly used to make sure that the system is automated. This reduces the time which could be used in calculation by the cashier and also saves the time of checking all the receipts to confirm the total sales for the day (Gabler et al. 2017. p267). Due to the reduced time when serving customers, more customers are served within a short period and raising the profit margins.

Customers also like to be served faster with no delay. As a result of the system, new customers are likely to be attracted enabling the company to have an added advantage to the other competing companies. Self-service and minimal interactions or discussions with the cashier are experienced, hence motivating the buyers. The inventory system is fed with all the information regarding the items to be sold, i.e. the price and the amount of the commodity in stock. After each sale is made the system subtracts the thing from the previous number making it easy to track the stock flow (Azevedo and Leshno, 2016. p1241). The sale window is renewed after purchase from every buyer; hence minimal errors are experienced. The owner can follow the stock even when he/she is not present or within the company.

The accounting processes are simplified, and hence no need of many accountants to maintain the hundreds of transaction made every day. This is an advantage of the system because it reduces expenses which could be incurred while paying the employees. Also, confidence is built in the owner because the system monitors the stock and hence no employee can tamper with the items sold because he/she can be easily noticed. The system can help in determining which product is being purchased in most cases (Soderbery, 2015. p12). In our case, the pos can decide which brand of tea is being preferred by the buyers. This helps to cope up with the ongoing trends in the market because the particular item can be added into the stock to enhance full supply to the customers. This makes the company achieve more in terms of sales and profit.

How to Implement the Proposed Strategic Plan

The system makes the customer relationship management better with the customers because their records can be tracked easily if he/she wants the purchase to be rectified. i.e., if the buyer makes a mistake on the item which he/she intended to buy, the item can be exchanged, and the new item will be subtracted from the stock and the one returned can be added back to the capital. This happens because the transaction is recorded individually for any buyer. The only proof of purchase is only the receipt which is given out during the payment process.

If the stock is nearly to be out, the specific products are brought in the required amount. When the goods are delivered, they are keyed in the pos system as they are packed in the respective quantities and placed in their specific locations. It is advisable to bring the items when they have not yet been exhausted in the stock so as the demand cannot exceed the supply. As the supply and chain management, we should ensure that the tea is distributed to all shops in the required time when the status of the stock is relatively lower but not after the completion (Fredendall and Hill, 2016).

In the implementation of the system the computers are the only equipment which is needed. The best and qualified system owner is hired to install the system in the machines and ensure it functions as it was supposed to. Password is then applied to ensure maximum security either in the sales reporting, customer management, inventory management or checking out tools. After the technical processes are over, there should be training for the users who will be using the systems to record all transactions. The cashiers should make sure they have understood the full functionality of the system to enable them to meet the goals of the system.

References

Azevedo, E.M. and Leshno, J.D., 2016. A supply and demand framework for two-sided matching markets. Journal of Political Economy, 124(5), pp.1235-1268. Retrieved from https://www.journals.uchicago.edu/doi/abs/10.1086/687476

Fredendall, L.D. and Hill, E., 2016. Basics of supply chain management. CRC Press. Retrieved from https://content.taylorfrancis.com/books/download?dac=C2010-0-35383-4&isbn=9781420025767&format=googlePreviewPdf

Gabler, C.B., Panagopoulos, N., Vlachos, P.A. and Rapp, A., 2017. Developing an environmentally sustainable business plan: An international B2B case study. Corporate Social Responsibility and Environmental Management, 24(4), pp.261-272. Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1002/csr.1409

Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons. Retrieved from https://books.google.co.ke/books?hl=en&lr=&id=bvNKDwAAQBAJ&oi=fnd&pg=PR11&dq=supply+chain+management&ots=E1g2og4YWH&sig=kNTKjrOhZxICLZuXFcv8DrtaAVQ&redir_esc=y#v=onepage&q=supply%20chain%20management&f=false

Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and supply chain management. Cengage Learning. Retrieved from https://books.google.co.ke/books?hl=en&lr=&id=cAJoBwAAQBAJ&oi=fnd&pg=PR4&dq=supply+chain+management&ots=RamRjeppFf&sig=Frf8c2St-REoeBCErNP1ty0VhuU&redir_esc=y#v=onepage&q=supply%20chain%20management&f=false

Soderbery, A., 2015. Estimating import supply and demand elasticities: Analysis and implications. Journal of International Economics, 96(1), pp.1-17. Retrieved from https://www.sciencedirect.com/science/article/pii/S0022199615000045