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Introduction

The current completion has forced the companies to build a loyal customer base for their products so that they can retain their position in the market amidst economic uncertainties (Clow & Baack 2011). The expansion of market share depends on the satisfaction of the customers from the consumption of goods and services. Hence, companies are required to provide products and services according to the expectation of the market at a competitive price at right time. In order to achieve this objective, a company has to ensure effective purchasing and inventory management. The stock of resources helps a firm to maintain fluctuations in demand in the market (Bala 2008).

In retail stores, purchasing and inventory management play a deterministic role in improving timely availability of products by reducing investment of working capital. This effectively helps in continuing the performance of the firm. However, a company can increase its production cost  if its purchase of inventory is done on basis of miscalculated forecasts, (Waller & Esper 2014). According to many eminent scholars, the cost of maintaining inventory cost represents one of the largest shares in the total expenditure of a firm (Singh 2009).

This report reflects the inventory and purchasing at Brisbane Outdoor Power Centre. There are three retail centres of the firm in Queensland (Case Study). However, the structure of the business has been different under the leadership of Donald Saxon but with Belinda Green’s integrated approach, the company would require some changes to make its production more efficient. This report accounts for the differences in both style of management and problem solving recommendations which could help the company in securing a better organisational structure.

Discussion based on the Questions

What are the current purchasing and inventory management processes being used by the company?

Answer: Brisbane Outdoor Power Centre was founded by Donald Saxon in Mt Gravatt as the first branch of the company in the year 1985. The company was operating from this branch till 2001 when Saxon acquired the Strathpine centre which was a profitable firm itself. Later, in 2004, the third branch of the company was acquired at Ipswich which was also a profitable concern. Saxon being the owner practiced laissez-faire management style and did not interfere in the daily operations of the three branches. In laissez-faire style of leadership, the leaders and managers do not direct employees what or how a particular task is done providing sufficient freedom to develop their own way of working (Chaudhry & Javed 2012). However, the employees are free to seek support from their superiors as and when required. Saxon followed it and had established an easy-going relation between the employees and managers of the three different location owned by the company (Case study; Tarsik, Kassim & Nasharudin 2014).

Saxon had acquired profit making business enterprises and allowed them to continue their individual operating practices as those were successful in bringing positive results. In spite of being one single company, the operation reflected the feature of three different companies. Saxon found that rarely there were any major issues and hence Brisbane outdoor was working with three separate operational unit which jointly supplied almost every type of garden tool that can be produced in the market of Australia. On the other hand at Strathpine, Belinda Green was operating with controlled inventory management regime by following ‘management by walking around’ style (Case Study). However, the other facilities operated with different inventory management processes.

However, without any distinct control among the three branches, the company was not able to forecast correctly the amount of inventory required by the manufacturing facilities which resulted in shortage or surplus of inventory. Three stores operating autonomously required the goods to ferry between the three locations in order to maintain steady supply of products which not only increased overhead charges but also failed to create an integrated approach. If three retail stores were to be concerned they had products from all the major brands but at an individual level there were variations in the stocks related to each brand. For example, the outlet in Ipswich had more variety in terms of ride-on mowers and other equipments which can help in gardening (Case Study). On the other hand, such varieties were not present in other two locations.

What are the comparative advantages and disadvantages of the currently used processes?

Answer: In case of Brisbane Outdoor, mainly two different processes of inventory management can be sighted owing to separate structure followed in three retail outlets. One is the decentralised inventory management structure and the other is controlled management through ‘management by walking around principle’. These two approaches are opposite to one another and have their own advantages and disadvantages which are described below:

Advantages of Decentralised or Laissez-Faire Inventory Management

  • The managers in charge are free to choose the level of products required by the retail outlet. There is less wastage as they can place orders according to market demand. The employees could work freely to ensure that they are able to provide best quality products and after sales services (Khan et al., 2015).
  • The independence granted by superiors motivates them to learn more and gather expertise on their work which results in significant improvement in the performance of the employees as well as the organisation as a whole.
  • The leaders and managers are highly respected by their subordinates which provides the opportunity to implement changes with minimal or no restriction.
  • There is greater cooperation among the workers due to inter-dependence in solving short comings.
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