ASSIGNMENT

NAME: ANOOSHA SIDDIQUI

ENROLLMENT NO: 02-116202-013
PROGRAM AND SEMESTER: BS SCM 4(A)
COURSE: INVENTORY AND WAREHOUSE MANAGEMENT
TEACHER: SHOAIB PASHA

CASE STUDY SUMMARY

This case study is about a diversified engineering company located in India named as Midex Engineering.
According to their acquisition plan they acquired a machine tool plant. Initialing it was manufacturing
general purpose machine tools, after some time their product line expanded rapidly to include special
purpose machine tools and transfer lines for machining automobile components. In addition to this, some
of their supplies started storing the material in their warehouses to give them material and serve their
production system in the best way. In short period of time hundreds of new items kept in the warehouse.
The warehouse was overloaded with materials which resulting made it impossible to store all materials in
the designated locations. The warehouse manager and purchasing management requested a capacity
expansion. Right now, the company did not have a separate department or people for dealing with the
issues of materials planning and inventory control. These tasks were informally doing by the purchasing
and warehousing departments. However, both departments were busy with their daily tasks and lack of
the resources as well as the professional competence to conduct the materials planning and inventory
management activities effectively. The management dependent on advice from purchasing, and a central
capital budgeting and planning department in making the warehouse capacity expansion decision. After
the approval of top management after two years the plant expansion was implemented. Moreover, a new
department was created to manage material management and inventory control as well as a trained
material management head was appointed. The new materials manager decided to tackle the interrelated
problems of inventory levels, variety of materials, warehouse organization, and materials accounting. The
materials planning department was requested to undertake a major study of existing stocks, ordering, and
stocking policies, and inventory control mechanisms. A special task force was set up to undertake this
task on an urgent basis. The following steps were taken. Obsolete and Slow-Moving Items: by doing
things Hundreds of obsolete items were identified and in the case of some items, product designers agreed
to specify them and use them up. All the remaining obsolete items disposed of in the most profitable
manner. In the case of slow-moving items, designers were first asked to attempt to increase the use of
these items, where feasible, in their new design work. Maintenance and other plants and other
departments were also encouraged to utilize the surplus items. At last only a few of the slow-moving
items had disposed. Standardization and Simplification of Materials: After analyzing the remaining
items, it was decided to classify them into the following four groups that are Regularly consumed direct
items, regularly consumed indirect items, Special direct items, and Special indirect item. Inventory
Control and Stocking Policy: Different inventory control and stocking policies were formulated for
standardized and non-standardized categories of items. Reorganization of the Material Storage Area:
Materials stored on the warehouse shelves were reorganized based on the new stocking policies. Many
unidentified items were taken out and displayed for identification by technical staff. After reorganization
of the storage area, duplicate locations were eliminated. The utilization of the vertical space in the
warehouse was also improved by providing additional materials storage equipment, such as bins, racks,
and fixtures. Many bulk items lying on the floor were placed in large vertically stackable bins. Some
additional materials handling equipment was also provided. Final Assessment: These improvements,
conducted over a period of about one year, completely turned around the original warehouse capacity
problem. While the firm experienced a benefit in terms of reduced inventories and related investment, the
main impact was the elimination of the need for a warehouse expansion.