The Morrison Company , Wheelwright , S.C and Myers, P. ( 2011), Assignment

The Morrison Company , Wheelwright , S.C and Myers, P. ( 2011), Harvard Business School - Assignment Example Breen can adopt the following strategies for bringing in the organizational change required to improve the performance. 1. It was found that personalization or customization of the smart labels is creating problems as Morrison was facing bottlenecks due to personalization delaying the packaging operation, moreover pharmaceutical companies required less customization as only 15% of orders were customized and its average price is $0.22 and represented two-thirds of Morrison revenue however 85% of retail orders were personalized with average price being only $.11. So it is recommended that personalization should be done only for large orders and not small orders and interchangeability manufacturing system should be introduced (Patil 2008). 2. Optimal Inventory Policy to be adopted: It was found that the current inventory policy of Morrison is inefficient as it is contributing towards significant lead time and suppliers are not able to supply 100 percent of the orders on time due to whic h Morrison is delivering orders 10 weeks later than the originally scheduled date. Therefore the inventory policy for materials has to change and optimum inventory policy should be adopted. Optimum inventory policy calls for two models, first through developing a simple model in which the relevant quantities and constant future demand flow are estimated in advance and second by developing an uncertainty model in which the random variable is demand flow is studied with probability distribution. Using two models, â€Å"the best maximum stock and the best reordering point are determined as functions of the demand distribution, the cost of making an order and the penalty of stock depletion† (Arrow et al 1950, p.1; Tempelmeier 2012). The optimum safety stock acts as a buffer production plan that takes into account the random uncertain events such as breakdowns of machines, random demands and late deliveries (Tempelmeier 2012). 3. ERP system to be launched: ERP system is used exten sively by both large and small and medium sized enterprises (SMEs). Breen should convince her CEO that ERP system provides both tangible and intangible benefits to the organization and its benefits are much more than its cost not vice versa. Tangible benefits realized from launching ERP system are reduction of inventory, personnel, financial close cycle, cost of IT, cost of procurement, and maintenance; improvements in productivity, order management, cash management, increase in profit and revenue and ensures on time delivery. Intangible benefits derived are increased visibility, improved processes, reduction in overall costs, customer responsiveness, more integration, flexibility, increase in performance of business and improved demand/supply chain (O’Leary 2004). It has become a must for integrating various business functions and for gaining competitive advantage however it must be customized, have support of top management (Fosser 2008). It can use materials requirement re source planning and manufacturing resource planning (Patil 2008). 4. Materials supplier sources should be increased: As it was found that