Scientific Glass, Inc.: Inventory Management

STEVEN C. WHEELWRIGHT WILLIAM SCHMIDT

Scientific Glass, Inc.: Inventory Management

In January 2010, Ava Beane, the newly hired Manager of Inventory Planning for Scientific Glass (SG), contemplated the critical nature of her first big project with the company. During her interviews for the job, several executives had told her very directly that the company’s need for a more effective way to manage its inventory was urgent. At the time, Beane had felt confident she could address the problem quickly and meaningfully. Now on the job for several weeks, Beane was gaining a fuller appreciation of the difficulties of the task.

Until recently, SG had treated inventory management as largely an afterthought. As a fast- growing organization with annual sales of $86 million, the company historically emphasized the twin goals of continued sales growth and high customer satisfaction. During the past year, however, executives at the company had identified a disturbing trend: Inventory balances were increasing substantially, which tied up extra capital the company needed to fund its growing operations. In recent years the company exceeded its target debt to total capital ratio of 40%. If this trend persisted, it could jeopardize SG’s ability to fund a planned expansion into new international markets.

Beane was given four weeks to come up with recommendations on how to make the inventory plan support the company’s sales and customer-service objectives without requiring a large capital investment. Faced with such a tight deadline, she hit the ground running on her first day at the company, interviewing relevant staff and gathering data. Three and a half weeks later, Beane felt that she had most of the information she needed to develop recommendations. In two days, she was scheduled to discuss her findings with Eric Gregory, the head of sales, and her new boss, Melissa Hayes, Chief Operating