Problems faced by Grandiose Motors Essay Example | Topics and Well Written Essays - 2500 words

Problems faced by Grandiose Motors - Essay Example Being proactive in his approach, the CEO wants to make sure that the planning for inventory management is done in advance so that the company can remain efficient. A major factor, which Felix Fabulous has extracted out, which could cause problems to the company is the inventory management system of the spare parts which are used in after sales service, one of the most important reasons why customers prefer Grandiose Motors over its competitors. In order to maintain the reputation of the company as an excellent provider of after sales service, the CEO wants to make sure that the purchasing and inventory management of the service parts should remain as efficient as possible and the company must be able to provide all the necessary spare parts without delaying customer wait time and at the same time reduce the cost of inventory holding and other operations in order to provide customers with low priced after sales service car repairs.. That is why he wants the purchasing department to de vise strategies for improved purchasing and warehousing of spare parts and other materials. A car dealership is a business in which profitability depends on per square foot of floor space and as vehicles occupy a lot of space, it is important that any car dealership must allocate maximum space to accommodate the placement of vehicles. In order to do so, it must utilize a much lesser space for other operations such as keeping and warehousing inventory. In light of this, Grandiose Motors faces the following problems related to space availability and inventory management: All the parts had different levels of demand and different suppliers; hence the company had to deal with many suppliers at the same time. This prohibited the company to achieve cost cutting as they could not purchase bulk quantity from a single supplier at a discount.