Reference no: EM131253610

Mando: Streaming Inventory Management for Growth

Mando Corporation is South Korea's largest manufacturer of automobile steering, brake, and suspension components. Originally a division of automobile manufacturer Hyundai, it is now separate, though both are in the same chaebol (conglomerate). Mando supplies many other automobile firms as well, including Chinese auto makers and GM. Its 2014 annual revenue was about U.S. $7 billion. With plants in China, India, Malaysia, Turkey, Poland, and Brazil as well as South Korea and with a wide range of mechanical and electronic products, inventory management is critical to its success.

With inventory management (and more) in mind, Mando chose Oracle's E-Business Suite as an integrated ERP system to connect all its divisions. Using a single enterprise-wide database reduced errors. For example, it enabled Mando to standardize on a common numbering system, eliminating inventory-tracking errors due to part number differences when applying design changes.

As you read in this chapter, inventory management decisions use a variety of reports. Therefore, if you saw "Mando Achieves 99.9% Accuracy in Inventory Tracking," you'd probably assume that management information systems and their reports were part of the reason. You'd be right. The E-Business Suite software can produce a wide variety of reports of all types.

Tracking inventory, or knowing what you have, is only part of the answer. You have to have the right inventory, which is often specified in reports. Inventory management decisions depend on reports as well.

Some inventory management decisions can be programmed. When stock drops to the reorder point, an order is placed for the reorder quantity. In this instance, management uses reports to make sure the programmed procedures are operating properly and meet the organization's needs.

Other inventory management decisions are less structured. New products have no usage history on which to base reorder points or quantities. Inventory of products being replaced must be managed to ensure proper phase-out. Management doesn't want to be left with a stock of parts that have no current use or run out of a key component before production ends. The transition from mechanical to electronic controls involves more than just replacing one part with a slightly different one. In making these inventory decisions, reports must be used along with sales forecasts and careful analysis to ensure that the right amounts of the right items are on hand.

In addition to reports, Mando used the capabilities of Oracle Business Intelligence software to create a real-time decision-making environment. Inventory information and other data are presented to senior managers through a dashboard on a daily and monthly basis. The dashboards deliver key information in an easy-to-view format and help managers determine business trends.

Park ByoungOk, Mando's CIO, is pleased with these software capabilities. He says, "The [ERP] system enabled us to standardize more than 200 processes globally, which gave senior managers an integrated, enterprise-wide view of sales, financials, inventory, and quality management." Giving managers an overview of the company is, in the final analysis, the purpose of any management information system

Discussion Questions
1. As a manager, you must choose between two inventory management software packages. One is a stand-alone package that only manages inventory. It allows users to define their own reports without much training. The other requires a professional programmer for new reports, but it is part of an ERP system that can handle much more than inventory management. Describe how you would choose between the two packages.

2. As a manager of a Mando factory, you might be faced with making inventory decisions about new products. Describe what steps you would take to transition smoothly from mechanical to electronic control of the inventory system? Once in place, what follow-up steps would you have to take to monitor the electronic inventory system?

Critical Thinking Questions
1. Managers at Mando receive daily and monthly reports. Describe the types of reports managers need to review daily and the types they need to review monthly?

2. Explain why it would be more difficult for Mando to manage its inventory if the databases for all its factories were different and used different numbers for the same part. Give a specific example of a problem that could arise.