Fruito Production and Operations Management

Question: Discuss about the Fruito for Production and Operations Management. Answer: Introduction: There are number of challenges, which are faced by the organization Fruito during receiving and ordering stocks. The challenges include: Manual counting of items: The organization Fruito counts the number of items manually, which is quite inefficient because it not only increases the cost of labor but it also lowers the return (Croson et al., 2014, pp. 177). It also enhances the risks of mistakes due to inaccurate counting and inaccurate figures of stock, which appears online. Inaccurate Monitoring of Stock Levels: Fruito does not have full information about its current stock and as a result they faces problem in ordering stocks. Inaccurate information leads to overstocking of a single specific item. Incorrect supplier lead-times calculation: The organization faces problems in ordering and receiving stock due to incorrect supplier lead- time. It is very much important to calculate the correct supplier lead-time during ordering new inventory, as it helps in proper management of stock control (Glock Ries, 2013, pp. 45). Just in Time, approaches are considered less effective and therefore the order that are delayed resulted into loss in the number of sales. Absence of Stock control centralization: The managers of Fruito faced problem due to absence of centralized stock control. The ordering and receiving of stock with the help of centralized stock control will be helpful in minimizing the problem, which are associated with the excess stock as well as obsolete inventory (Hijazi et al., 2016, pp. 452).Without centralized system, it is quite difficult to manage the procedure of ordering and receiving stocks. Absence of proper team members resulted into improper information: Due to absence of proper team members, Fruito does not know have proper information when to order new items of fruits or which item is in demand (Angel McCabe, 2013, pp. 587). This lack of information leads to loss in the number of sales of fruit. Absence of proper procedure of management: Due to absence of proper management, it is impossible to know the reason behind the rise in stock of a specific item. Unavailability of historic sales for forecasting data: The Company depends on historic sales for ordering and receiving. If an organization does not have proper data and information about it historic sales, then it will be a difficult task to predict the future demand accurately (Luo et al., 2015, pp. 124). Seasonal variations in the popularity of certain fruit can result in overstocking of that item. Potential impact of each risk to Fruito The challenges, which are faced by Fruito during ordering as well as receiving stocks, have great potential impact on the various operations of the organization. The impacts include: Incorrect counting of items: The use of manual counting creates incorrect figuring of stocks, which further arises problems in proper and accurate delivering as well as ordering of fruits by the organization. Incorrect forecasting of sales: Incorrect forecasting of sales leads to incorrect ordering of items (Wang Chang, 2013, pp. 338). The organization cannot predict the future demand of the people accurately and as a result, sometimes due to this they are unavailable in supplying the products, which is demanded by a consumer. Improper Information: Absence of proper team members leads to incorrect collection of information or the data that is collected is not sufficient (Croson et al., 2014, pp. 177). As a result, the problem that arises includes unavailability in supplying items, reduction in the number of sales and wrong forecasting about products. Improper procedure followed by management: It is not possible for Fruito to know about the stock of a specific item, as there is no proper procedure followed for storing histories information of sales. This leads to number of problems including low number of sales, overstocking of an item and inefficient delivery. Inaccuracy in monitoring stock levels: The organization does not have accurate information about their stock levels and as a result they faces problem in ordering items (Glock Ries, 2013, pp. 45). Many issues arises which includes incorrect ordering of items, overstocking of a specific item, inefficient in meeting the demands of the customers and many more. Improper supplier lead-times: Improper supplier lead-time raises number of problems, which are associated with the sales of the company. The planner cannot track the system properly and as a result each supplier as well as vendor lead times generates lowering of insights, cancellation of account and it lowers the number of sales. Improper management of stock: Due to absence of centralized system, the company cannot manage the ordering as well as receiving of stock correctly and therefore the number of sales decreases (Angel McCabe, 2013, pp. 587). The procedure of stock control is not managed effectively due to which the management of the organization does not have proper data and information about the items they order or deliver. Implementation of Internal Controls by Fruito The organization Fruito must implement corrective internal control system in order to minimizing the challenges that the company faces during ordering as well as receiving stocks. The corrective internal control is quite advantageous because they are designed for correcting the errors or irregularities, which are detected by analyzing the different challenges, which the organization faces (Feng et al., 2014, pp. 530). It not only helps in minimizing the risks but it also helps in increasing the sales of the organization indirectly by resolving the challenges which are associated with the various operations of the organizations. How the above-mentioned factors helps in mitigating the identified risks The corrective internal control helps in mitigating the risk, which are identified by the organization. It helps in implementing certain procedures, which are beneficial in resolving the issues, which are associated with the organization. The procedures or methods include: Use of barcode: The use of barcode not only helps in solving the problem of manual counting but it also helps in mitigating the risks which are faced by Fruito due to incorrect figuring of items. Use of centralized database: The centralized database helps in collecting proper and accurate information about the number of items and it reduces the problem of inaccurate data. Access to historic sales data: The emerging technology is used by the company in order to develop their database where information about their previous as well as present sales is stored This helps in predicting the future demands for the consumers accurately. Storing historic information: Fruito must put an effort in storing its historic sales with the help of some database so that the problem of incorrect forecasting will be solved. Manual system should be replaced: It helps in resolving the problems that arises due to inaccurate data and information that is stored manually. Proper statistical method must be followed: This helps in providing correct prediction about any specific item, which resolves the issues of incorrect forecasting. Proper procedure must be implemented: Proper policies and procedures must be implemented in order to mitigate the risks and for managing the stock of Fruito correctly. Team creation: The team members will be helpful in controlling the excess stock of the company, in collecting information about sales and delivery. Proper monitoring of stock levels: The stock level of the organization must be monitored correctly in order to collect correct information about the stock of the shop. Use of innovative technology in monitoring stock level: The use of proper as well as efficient technology will be helpful in monitoring the level of stocks correctly. Proper lead-time: It will not only help in mitigating the risks but it also helps in increasing the sales of the company. Tracking system must be introduced: Proper tracking system must be introduced in order to track the number of items delivered or ordered. Proper management of stock: The stock of Fruito must be managed properly in order to deliver and order the stock efficiently. Implementation of centralized system: The implementation of centralized system helps in correcting the procedure of stock management. The centralized system helps in keeping the data as well as information of every item that is received or delivered. Summary of the findings for the CFO Problems Impact Mitigation Manual counting of items Incorrect delivery of Fruits Incorrect Figuring of items (Wang Chang, 2013, pp. 338). Use of Barcode Use of centralized database Unavailability of historic sales for forecasting data Unavailability of access to the database Incorrect Forecasting Wrong predictions of sales Seasonal variations cause outrages of products (Feng et al., 2014, pp. 530). Access to historic sales data Storing historic information Incorrect supplier lead-times calculation Incorrect ordering Delayed ordering and receiving items Loss in the number of sales Accounts cancellation (Angel McCabe, 2013, pp. 587). Use of correct supplier lead time Tracking system must be introduced Absence of Stock control centralization Improper control of stock Ineffective procedure of delivery Incorrect data and information about sales Difficult to manage the procedure of ordering and receiving (Hijazi et al., 2016, pp. 452) Use of centralized system helps in mitigating the issue. Proper management of stock Inaccurate Monitoring of Stock Levels Incorrect collection of data and information Incorrect forecasting Procedure of ordering and delivering are inefficient Proper monitoring of stock levels Use of innovative technology in monitoring stock level Absence of proper team members resulted into improper information Incorrect prediction Inaccurate data Reduction in sales (Glock Ries, 2013, pp. 45). Manual system should be replaced Proper statistical method must be followed Absence of proper procedure of management Improper delivery Insufficient in meeting the demand Lowering the sales Proper procedure must be implemented Team creation References Angel, J. J., McCabe, D. (2013). Fairness in financial markets: The case of high frequency trading.Journal of Business Ethics,112(4), 585-595. Croson, R., Donohue, K., Katok, E., Sterman, J. (2014). 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