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Arrow was founded in the early 1935 as a retailer of radio equipment. Later the company expanded to sell entertainment products and electronic parts. In 2002 Arrow’s global sales were $7.4 billion. The semiconductors products generated over half of the company revenues. Since then, the company has engaged in valued added services. Value added is used to describe instances where a firm takes a product that may be considered a homogeneous product, with few differences from that of a competitor, and provides potential customers with a feature or add-on that gives it a greater sense of value.
A value added product can either increase the product’s price or value. For example, offering one year of free support on a new computer would be a value-added feature. Arrow enhanced its products and services before offering the product to customers. The company invested heavily in a sales force and logistics capabilities.
Arrow Electronics knew they had to pay close attention to operations. The company knew the goals of the organization and developed a clear vision of exactly how operations will help achieve them.
It involved translating the goals into implications for the operation’s performance, objectives, quality, speed, dependability, flexibility and cost especially at their distribution centers. Management knew inventories are considered an important asset and are critical for business success. Arrow used a lot of technology and inventory data at Arrow were extremely accurate. In order to keep inventory data accurate, Arrow invested heavily in information technology. The inventory tracking technology resulted in a better bottom line and a more profitable business.
Effective inventory management augmented by technology helped Arrow keep track of inventory, streamline ordering and track items throughout the product’s sales cycle.
The three information systems they used were the sales desktop, the mainframe system, and the WMS. The system sales desktop allowed the sales representatives to view the products information, cost, and their buying patterns. The mainframe system maintained the customer inventory, orders and the logic for sales order processing. The system acted like a repository of all data and converted the orders received from the sales desktop. The mainframe system was the core operating system. The system was impeccable in its ability to track inventory at detailed levels. Fortunately Arrow’s approach to inventory accuracy is not excessive because the system actually saves them money on their inventory management. Inventory management software helped Arrow automate processes and better manage systems to prevent losses from hidden costs. Because Arrow’s major systems were develop in house, they are going to have difficulty using commercial software if their software have issues. Arrow Electronics purchased the company Eagle Semiconductor.
Eagle traditional strategy of operating several regional warehouses and moving the inventory into Arrows primary distribution center was a business decision that needed to be made by Betty Jane Scheihing, Senior Vice President of Worldwide Operations at Arrow Electronics. The warehouses performance, customer complaints, and inventory management were bad. Scheihing should explain to management and Eagle’s centers When inventory inaccuracy occurs, inventory management associates should address the issue in a way to reduce the risk of bad performance in the centers. They should request an immediate recount, adjusting the inventory records accordingly. The management associates should evaluate their options in terms of shipping cost, delivery date and time, and the urgency. Companies like Arrow depend heavily on inventory accuracy to operate or fill client orders. Inventory is the major company asset that assisted with tasks such as planning. Thus keeping accurate inventory records as a major management tool has multiple benefits.
When accurate inventory records are kept, the data tells whether you can take on client requests or particular projects with the inventory on hand. Arrow can get a sense of when they will need to order new items. Arrow also can review the inventory records to identify inventory trends over time and make some basic predictions about inventory that might run out faster than usual. All of these elements mean they can plan and strategize. This is critical to developing and maintaining relationships. Good inventory records mean that when customers call or write with inventory-related questions, they can find the answer quickly. A fast response time usually means the customer gets a better impression of the company. When they know exactly what inventory they have and where it is stored, they can retrieve it promptly and fill customer orders efficiently. The ability to deal with inquiries and fill orders quickly means the company is able to serve more customers and move more inventory through the company, resulting in higher profit. If customers have to wait for responses or products, they may cancel orders and go to other companies.
Inventory inaccuracy could possibly have a significant impact on the Arrow’s performance. Inventory inaccuracy increases the time spent on the inventory management process. Additional time in multiple departments is spent on researching discrepancies, correcting systems data, and communicating concerns. Inventory inaccuracy impacts the organization’s financial performance in terms of the cost of goods sold. Increased costs are the result of expediting shipping, additional labor, and loss of production. Arrow had inventory inaccuracies when they gave low level warehouse operators the responsibility of finding and correcting inventory errors. Having a group of people with inadequate training and experience count and adjust inventory was a little advanced for their pay grade.
Arrow should of made sure who had control over affecting inventory. This is especially true in manufacturing operations where the priorities of machine operators and production supervisors are meeting the production schedule, keeping the machines running, and ensuring the quality of the product being produced. Inventory accuracy should never be a primary responsibility of those types of positions. Once Arrow came to this realization, it was easy to see the benefits of putting inventory and material handling responsibilities in the hands of people whose primary job is auditing and oversight. Overall Arrow Electronics Operational Execution was great. They invested heavily in technology to manage their operations.
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