CVG UK: Calculating Holding Cost was a lot easier in Ops Class
Today, we spent time in the KAB seating warehouse timing a few specific activities so that we can get a reliable estimate for the labor cost portion associated with the cost of holding inventory. It might not sound glamorous, but it was an awesome opportunity to apply what we have learned in the classroom to a real life situation.
We are tasked with creating a cost model that represents the actual landed cost of a particular set of component parts for CVG. Part of that model includes developing a method to accurately assess the cost of holding inventory waiting to be shipped to other locations. To perform this analysis, we first interviewed contacts from both inbound and outbound logistics so that we could accurately map all activities involved in receiving and handling a part from the time it reaches KAB warehouses, until the time it is loaded on a container and ready to leave KAB.
First, we timed the unloading and receiving process. We watched and timed as one KAB employee unloaded twenty two pallets from a truck. Upon completion, a different individual came to scan each item and check it into the KAB inventory system. By timing this process, we hope to get a better idea of the typical amount of labor dedicated to a particular group, so that we can add this information into our model as an additional cost of holding a product in inventory.
I plan to pursue a career in marketing upon completion of my degree, but this project has already made me appreciate the complexity and interdependence of different functional areas. GAP has given me the opportunity to analyze a problem across multiple disciplines all while assessing the implied risks inherent in making sourcing decisions.
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