Echelon Inventory

In: Business and Management

Submitted By brianwb1
Words 320
Pages 2
What is ‘echelon inventory policy’?

Within our readings for this week, Simchi-Levi makes discussion referencing to a concept called ‘echelon inventory Policy’. What is ‘echelon inventory?

It took quite a while to research what exactly echelon inventory is. Even when browsing the World Wide Web, definitions for the key words ‘echelon’, ‘echelon inventory’, and the like, turned up with very abstract notations but no real definition. In fact, the notations discussed multi-echelon inventories…. Even with that, no definition. I have to surmise it is a fancy word for something simple…. Good ‘ol jargon.

To relate it to non-management terms, in highway maintenance, the term ‘echelon’ is referred to a particular arrangement, or formation (position). For instance, when plowing snow off a multi-lane highway, trucks would be staggered in an arrangement where the second truck would be behind the first, but off to the left or right as to pick up what the 1st plow left plus his part of the road.

In Supply Chain Management, ‘echelon’ refers to inventory and the position in with it is located within the organization. In a white paper prepared by Manhattan Associates, Manhattan defines echelon as “… tiers in the distribution network.” It appears multi-echelon and echelons are synonymous; I don’t know for sure. Manhattan’s paper continues to discuss multi-echelon supply chain as where a manufacturer would have a warehouse (or several—that’s multi-echelon) where it stores its product. From there, product is distributed to local or regional warehouses prior to being shipped to store locations.

Without going into a complete analysis and report, a real life example would be Anheuser-Bush Companies.

Manhattan Associates. 2011. Multi-Echelon Inventory Optimization. Retrieved on February 27, 2011 from…...

Similar Documents


...Computers and Chemical Engineering 28 (2004) 929–941 Pharmaceutical supply chains: key issues and strategies for optimisation Nilay Shah∗ Centre for Process Systems Engineering, Department of Chemical Engineering, Imperial College of Science, Technology and Medicine, London SW7 2BY, UK Abstract Supply chain optimisation is now a major research theme in process operations and management. A great deal of research has been undertaken on facility location and design, inventory and distribution planning, capacity and production planning and detailed scheduling. Only a small proportion of this work directly addresses the issues faced in the pharmaceutical sector. On the other hand, this sector is very much ready for and in need of sophisticated supply chain optimisation techniques. At the supply chain design stage, a particular problem faced by this industry is the need to balance future capacity with anticipated demands in the face of the very significant uncertainty that arises out of clinical trials and competitor activity. Efficient capacity utilisation plans and robust infrastructure investment decisions will be important as regulatory pressures increase and margins are eroded. The ability to locate nodes of the supply chain in tax havens and optimise trading and transfer price structures results in interesting degrees of freedom in the supply chain design problem. Prior even to capacity planning comes the problem of pipeline and testing planning, where the selection of......

Words: 10158 - Pages: 41


...Ethics Awareness Inventory Octavio Landeros PSYCH/545 - Survey of Professional Psychology August 12, 2013 Instructor: Mary Mc Greevy Abstract The purpose of the summary is to elucidate the importance of a personal ethical perspective and to scrutinize the affiliation between professional and personal ethics in psychology. The summary will analyze by taking into account the results of the Ethics Awareness Inventory (EAI). Ethics Awareness Inventory In today’s society, there is a fine and invisible line among individuals and professionals: ethics. The meaning has become so multifaceted that people’s views about ethics have become unstable and broad. Ethics relate to moral principles to guide individuals and to teach them how to conduct themselves in society by differentiating between rightness and wrongness. The standard of right and wrong defines the aspect of ethics. Ethical dilemmas will arise and will bring a tangle of questions to the professional. The professional will wrestle with questions that will be hard to admit to themselves and others (Pope & Vasquez, 2011). It is human nature to make rushed decisions and mistakes makes humans question their professional and personal ethics. Ethics will help the professional answer those tangled questions. An ethical awareness will let the professional weigh the choices that will affect the lives of colleagues, the public, and the clients. An ethical awareness will free the professional from the restraining......

Words: 1102 - Pages: 5


...Table of Contents Introduction 3 Answer 1: Supply Network Prospective 4 Failure to integrate the facilities 5 Vertical integration 5 Horizontal Integration: Single Company Strategy 6 Benefits: 7 Product range 7 Lack of customer consciousness and commitment to service 7 Poor internal and external communications 8 Answer 2: Customer service 9 The components of customer service 9 Answer 3: Inventory Management 11 The poor solution – the economic order quantity (EOQ) ‘fix’ 12 ABC analysis 13 Material Requirement Planning (MRP) 13 Enterprise resource planning (ERP) 14 Just-in-time management 14 Kanban 15 The effect of JIT on operations 16 Answer 4: Operations Performance Objectives 17 Quality 17 Speed 18 Dependability 19 Flexibility 20 Cost 21 References: 22 Introduction United Biscuits is a leading European manufacturer of biscuits and bagged snacks. It has 14 geographical locations in the UK with revenue of £1.1 billion in 2007. No of employees: 7,200 people in the UK Business Sector: Food manufacturing IT was founded in 1948 following the merger of two Scottish family businesses — McVitie & Price and MacFarlane Lang. In 1960, United Biscuits added to its portfolio with the acquisition of Crawford's Biscuits and MacDonald's Biscuits. In 2000 UB was bought by Finalrealm, a consortium of investors, and reverted to private limited company status. United Biscuits (UB) is one of the world’s pre-eminent branded......

Words: 5458 - Pages: 22


...Iowa State University Digital Repository @ Iowa State University Graduate Theses and Dissertations Graduate College 2008 Inventory management in a manufacturing/ remanufacturing hybrid system with condition monitoring Bhavana Padakala Iowa State University, Follow this and additional works at: Part of the Industrial Engineering Commons Recommended Citation Padakala, Bhavana, "Inventory management in a manufacturing/remanufacturing hybrid system with condition monitoring" (2008). Graduate Theses and Dissertations. Paper 11925. This Thesis is brought to you for free and open access by the Graduate College at Digital Repository @ Iowa State University. It has been accepted for inclusion in Graduate Theses and Dissertations by an authorized administrator of Digital Repository @ Iowa State University. For more information, please contact Inventory management in a manufacturing/remanufacturing hybrid system with condition monitoring by Bhavana Padakala A thesis submitted to the graduate faculty in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE Major: Industrial Engineering Program of Study Committee: Sarah M. Ryan, Major Professor Jo Min Danny J. Johnson Iowa State University Ames, Iowa 2008 Copyright © Bhavana Padakala, 2008. All rights reserved. ii TABLE OF CONTENTS LIST OF FIGURES ........................................................

Words: 17671 - Pages: 71

Inventory, it needs to keep track of the products in the firm. Keeping an accurate inventory is critical to lowering costs and providing a more streamlined operation. Traditional inventory management has largely been phased out by technologically advanced. They rely on hand-counted or electronically reported stock levels, manual order placement and storage. The SJF Auto Parts needs a computerized inventory system because of transactions they covered. In the helps of the system it makes everything from inputting information to taking inventory easier and leads for their success and growth. The owner can monitor the business at the website so that the owner can monitor at lest they can’t go to the store because of some agendas. The system's availability of sufficient products for the customers whereas function deals with monitoring the stocks of the products. Checking of stocks availability, generating and providing the reports on time, securing of important data and information.. .Primary reason to hold inventory is to offset uncertainties in demand . if demand increase and raw materials stocks run out, the production line shuts down until more materials is delivered. Likewise, a shortage of work in process means the product cannot be finish. Finally, if customers order outstrip finish good supply, the resulting stock outs could lead to lost customers. SJF auto parts suffer in the manual inventory system . Counting the amounts of Billions of auto parts to the smallest and to......

Words: 337 - Pages: 2

Inventory statements as of December 26, 2012 as compared to Red Robin Gourmet Burgers Incorporated’s accounting policies Abstract: An discussion of Denny’s Corporation’s accounting policies and financial statements as of December 26, 2012 as compared to Red Robin Gourmet Burgers Incorporated’s accounting policies Accounting Policies Project Part 1 Accounting Policies Project Part 1 Table of Contents Report 1 Part 1: Discussion of the Balance Sheet Part 2: Discussion of the Consolidated Statements of Income Part 3: Discussion of the Statement of Cash Flows Part 4: Discussion of the Auditor’s Opinion Part 5: Discussion of Revenue Recognition Part 6: Discussion of Accounts Receivable Part 7: Discussion of Inventory and Cost of Goods Sold Part 8: Discussion of Property, Plant and Equipment Report 2 Part 1: Discussion of Intangible Assets Part 2: Discussion of Current Liabilities Part 3: Discussion of Long-Term Debt Part 4: Discussion of Leases Part 5: Discussion of Stockholder’s Equity Part 6: Discussion of Statement of Cash Flows Part 7: Overall Evaluation Denny’s Corporation Financial Statements Notes MD&A Red Robin Gourmet Burgers Inc. Financial Statements Notes MD&A Part 1: Discussion of the Balance Sheet This section will briefly overview and list the major components of Denny’s Corporation and Red Robin Gourmet Burgers, Inc.’s Balance Sheets and then discuss any significant deviations from expected......

Words: 5004 - Pages: 21


...manual on all of their transaction resulting to slow service 1.2.2 Specific Problem Manual transaction makes the processing and validating of the inventory a time consuming task. -Supplies being delivered by the Supplier was counted and processed manually,And the Supplies that are being added and Out are also using manual transaction. Thus errors in counting and doing reports may be committed. 1.3 Objectives of the Study -Our main objective is to create and develop a computerized system that will help PC world in their transactions. 1.3.1 General Objective -To create a computerized Inventory System for PC World that will make the transaction easier , faster , and secure 1.3.2 Specific Objective To create a module that can easily validate and process the inventory for future use. -The proposed system has a module that will validate and process the inventory system for faster transaction To create a module that can easily know the incoming and outgoing products for the the inventory system. -The proposed system has a module that will process the incoming and outgoing products for faster transaction. 1.4 Significance of the Study -The following will be the beneficiaries of the proposed System Owner -The proposed system will help their company improved their inventory system that will provide accurately reports and faster transaction. Students -The proposed system will help them in getting idea of doing their......

Words: 769 - Pages: 4

Inventory Replenishment

...A novel technique of information flow in a multi-echelon supply chain comprising strategic partnerships for facilitating just-in-time inventory replenishment through automated order processing Kishor Pankan, Procurement Manager, ALHOSN University (Abu Dhabi), United Arab Emirates Inventory replenishment is a known SCM challenge area especially under uncertain demand and supply scenarios. Lack of synchronization of supply and demand information may lead to stock overflows or stock out scenarios leading to financial losses, and loss of customers and prospects. Strategic partnership and flow of timely, accurate, and complete information are recognized methods for dealing with demand and supply uncertainties. These methods help in dealing with extreme inventory replenishment problems during Forrester (Bullwhip) effect scenarios, as well. In absence of these methods, inventory managers allow asynchronous replenishment policies like beer game and rationing. Past research studies have proved that such asynchronous replenishment policies cause stock overruns and stock out situations, and amplify the demand fluctuation waveforms caused due to Forrester effect. Strategic supplier and buyer partnership is the recognized solution to inventory replenishment problems. However, lack of synchronous information flow and human interventions in information access and order processing may make such partnerships ineffective. In this research, a novel technique of information flow and automated...

Words: 363 - Pages: 2


...Company A having larger inventory than Company B. Company A (with larger inventory) will have the following advantages: * Lower ordering costs: For the raw materials they will be able to spread the fixed ordering costs over a larger amount of goods. * Quantity discounts: For the raw materials they would be better positioned to request quantity discounts because they would be ordering in bulk amounts. * Lower transportation costs: For the finished goods they will be able to reduce transportation costs because they can deliver more of the goods in one shipment versus having to deliver individual items. * Lower setup costs: For the work-in-process inventory they will be able to reduce setup costs that are incurred for switching between products. * Higher capacity utilization: With large inventory, they will be able to utilize their installed capacity to the maximum possible level. * Higher customer service: Provide better customer service by avoiding stock outs and backorders on finished goods. By avoiding these two scenarios they will be able to ensure on-time delivery. * Buffer: An excess inventory of finished goods can provide a buffer for increases in customer demand. The business is taking a risk by building and storing finished products in anticipation of customer demand, but it can reduce the lead time and improve customer satisfaction. Company B (with smaller inventory) will have the following advantages (has smaller inventory): * Less......

Words: 1955 - Pages: 8


...high inventory levels - Improve production scheduling - Use correct performance metrics Exercise 4: Sessions Six and Seven Part 2: Information Requirements Determination (IRD) Complete Part 2 in Session 7 Instructions 1) Select a structured interview technique to determine supply chain information requirements at your organization. You may choose ONE of the following: a) Business systems planning (BSP) Focus on information needed to support cycle time reduction. 2) Follow the instructions below for the interview technique you selected: a) Business Systems Planning (BSP) i) Identify and describe one specific supply chain problem to be solved or decision to be made at your organization. One major supply chain problem is the overall high levels of inventory. Methods to reduce; i)Re-engineer. Major reductions - re-engineering of the order-to-delivery cycle to find ways to do it faster, better, cheaper. ii) Improve supply chain management. By streamlining the entire supply chain, a company can reduce inventory, improve time to market, compress cycle times, free up more cash, decrease costs and improve profitability. iii) Revise order cycles/quantities: Smaller and more frequent order quantities translate into fewer inventories iv) Centralize inventory: distributed warehouses require more inventory than centralized facilities. The key driver of the increased inventory......

Words: 479 - Pages: 2


...General Services Office Inventory System Chapter 1 THE PROBLEM AND ITS BACKGROUND Introduction Computer systems and applications are basic tools used for companies and even small businesses nowadays. In order to make the tasks easier and avoid time consuming, computer technologies are now a big help. It provides tools for the employees in every office for easy tracks of daily activities related to their jobs. The computer systems and applications we create plays a vital role to make the daily works made easier, less time and efforts, more productive and accurate especially in an establishments like school offices. Computerization is now the basic necessity for every establishment, yet there are also still using manual methods which make them outdated. The General Services Office (GSO) of Divine Word College of San Jose is one of the offices which used manual methods for keeping records and transactions which make them consume lot of time and effort to find and manage all the information they needed. The data and transactions may not 100% reliable because it is handwritten and or because of human error lack of detection. The General Services Office Inventory and Scheduling system is designed to give accurate data about the first in and first out items within the office and provide accurate information on day to day schedules and reservations of specific rooms to avoid errors and conflicts to a certain schedules. The personnel in charge for the system have a......

Words: 1865 - Pages: 8


...CHAPTER I INTRODUCTION Background of the Study Inventory is basically the total amount of goods and materials held in stock by a factory, store and other business. An inventory system is a process whereby a business keeps track of the goods and material it has available. In its simplest sense it can be done manually by a count at the end of each day. In this way it is possible to keep a record of the goods coming in to the business and goods being sold. (Chapter 1 Inventory System, 2011) Since manual inventory consumes a lot of time and is prone to errors, it would be helpful to build a system that will computerize the transactions from acquisition of the product description to updating the inventory database. The computerized inventory system will improve employees’ work efficiency by computerizing routinely and time consuming tasks such as the time spent in taking down product information. As a result, the time can be used in more productive activities. The accuracy of the current system will also be improved, since the computerized inventory system would eliminate the need of constantly encoding lengthy details of products by having an inventory database. Monitoring encompasses the tracking of individual processes, so that information on their state can be easily seen, and statistics on the performance of one or more process can be provided. The Baguio City Hall Monitoring and Inventory System for Supplies and Properties is a proposed system to......

Words: 1885 - Pages: 8

Upper Echelons of Nokia

...Suri, C.E.O From: Shreya Chugh, UOM Subject: Upper Echelons of Nokia Nokia is one of the leading companies in the sector of advanced technologies and mobile network with an advantage of 100 years of experience and expertise in telecommunications from 2G to 3G to 4G and now the emerging 5G. It has always been and intends to remain at the cutting edge of mobile technology. (Anon, 2015) Its market share was 48.7 percent in the third quarter of 2007. By the third quarter of 2012 the company's market share had slipped to just 3.5 percent (Statista, 2015). Nokia has shown great improvement ever since this decline. Coming in 3rd place, scraping what market share has been left behind from the dominant Android and iOS, it continues to be one of the largest operators in the market (Byron, 2013). This memo attempts to closely evaluate the reasons behind the decline of the market share and will primarily focus on the decision making by the upper echelons of the company that led to this decline. Its main aim is to provide possible interventions based on the upper echelons theory that could help the company regain its lost position and customer base. This memo will dive deep into the cognitive frames and the demographic characters of the CEO and the top management team (TMT) that affect the strategic decisions of a company, based on the theory. It will be imperative to do a quick historic evaluation of the impact that upper echelons theory had on Nokia’s past performance so that......

Words: 1129 - Pages: 5


...Student Name: | Topic Reflected on: Inventory | | Date: 3/22/2015 | | Discuss important issues an accountant must consider when accounting for inventory. Make sure you explain why it is an issue.An issue an accountant must consider is whether the goods that are in transit belong to the company in inventory or the customer. This issue is related to ownership of the goods to decide whether a sale has occurred or if it remains in inventory at the end of the period. Accountants must also consider the issue of valuing of inventory. This is an issue because records must be kept consistent when recording inventory so that it is fairly valued in accordance with the accounting method chosen such as, FIFO, LIFO, or weighted average method to determine the value of inventory. The inventory method chosen can results in different amounts for the cost of goods sold. Inventory detail can be an issue as it must be accurate related to FIFO and LIFO so when selling units the correct per price point is used for each method. Shrinkage costs can be an issue if the difference in current inventory costs are drastically different from the physical count. A drastic difference means there is high human error or theft of inventory. Determining which method will affect the income of a company and the taxes a company has to pay can be an issue depending on the company. If a company is trying to pay lower income taxes, the method chosen is directly related to the economic environment. ......

Words: 1454 - Pages: 6


...3 phase approach to solid inventory record system o Design of the inventory record system and creation of the internal capabilities to put into place and keep it operating o Straightforward development of initial inventory balances o Ongoing operation and control of the inv record system, where responsibilities are defined and sources of errors can be located and eliminated. • measuring inventory accuracy needs to take into account tolerance. Might miss exact number on most of the items but might fall within the % variance of each item and then no problems. Thus overall inventory accuracy = (total accurate records / total records checked) *100 = % of accuracy • dollarizing value of firms inventory may be accurate to penny but that accuracy could hide appalling level of part specific inaccuracy. • tolerances may be set based on a products: o usage o dollar value o lead time o level in the bill of material o criticality o method of handling • most companies multiply usage by value in order to compute ‘dollars spent during the year for each part’. That typically will follow 80/20 rule. 80% of dollars spent per year will be on 20% of parts. Chart would be: ▪ Cost Class Parts Puchased % $ Spent % Tolerance % ▪ A 20 80 +/-0 ▪ B 30 15 +/-2 ▪ C 50 5 +/-5 • This however ignores the velocity......

Words: 1251 - Pages: 6