Determinants and it needs best practice and knowledge to

Determinants
of Non- moving Stock of Spare Parts with Special Reference to Ford Sri Lanka

Chapter
1

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1
Introduction

1.1
Background of the Study

The performance of a company is
highly depends on the stock level that maintain by itself. Especially the
maintaining a well managed stock level of spare parts is more important for a
company that engaged with selling vehicles to the market. Any vehicle is unable
to operate at a high level without a reliable supply of functional spare parts.
The availability of the spare parts highly depends for the satisfaction of the
vehicle owners, increases new vehicle sales, and the availability of spares for maintenance and repairs when
required at an optimum cost. Service excellence is key to
customer retention. The supply chain is the key to the profitably of the
company. Maintaining a spare part department is always lead complains of non availability
of the spare parts to meet requirements of the vehicle owners and financial
department always faces the problem of keeping liquidity and profitability of the
company and it should keep balance between those liquidity and the
profitability. Management of spare parts
inventory is not simple because spare parts can appear easily.  But in
reality they are different from other inventory types and it needs best
practice and knowledge to maintain and manage the spare parts store. Because a
vehicle includes number of thousand parts with it and separately identification
is much difficult.

Vehicles can be either consumer
good or production good, based on the usage of that vehicle. But the thing is,
although it is a consumer good or production good it could not consider as a
normal good because there is a positive relationship between price and the
quantity demanded. When the prices of such type of good (vehicle) increases the
quantity demanded increases with the same direction (positive).These type of
productions use by the people to show their wealth, the income status and the
family status to the community.

 There is no direct demand for spare parts as
consumer goods and services, it has an indirect demand. Because of the
consumers are unable to satisfy, by using spare parts. Spare parts buy for the
purpose of maintenance and repair of the vehicle for the future usage of the
vehicle. And the requirement for the spare parts is depended and varies on some
reasons. The technology can be mainly affect for the spare parts demanded. When
the technology that uses for the production of the vehicle is in higher level
the spare part demand gap become increases and when it lower the demand gap
also decreases. The occurrence of accidents sticky affects for the spare parts
demand. When the accidents faced by the vehicle increases the demand go
together with it. The infrastructure facilities, the weather conditions and the
attention pay for the vehicle by the owner is affect spare parts demanded
indirectly.

Due to these types of specific
characteristics in after sales (spare parts) market, it occurs the non moving
of the stock. Because of the problem of identification the exact demand level
and the demand function. And this is mainly suffered by the spare parts
organizations in all over the world. 

 

1.2
Problem Statement

The success of the spare parts
organizations are largely depends on the availability of requested parts by the
vehicle owners. Because of major characteristics of a good vehicle is the
availability of the spare parts. They not only focus about the vehicle brand,
facilities and the comfortable of the vehicle. If parts are available at every
time or in small period of time the willingness to buy of such vehicles become
increases. The company image also has erect and improved.

The Future Automobiles (pvt) Ltd (Ford
Sri Lanka) faces a heavy non moving stock of spare parts in the after sales
department of the company and it is around Rs.86 million from Rs.110 million
total stock.

The company needs to find
strategical solutions for the mentioned problem, remove the non moving stock
and need to find well managed ordering manner.

 

1.3 Research Questions

a)      What
are the determinants for the non moving stock of spare parts of the company?

b)      What
are the reasons that affected for the current stock of spare parts?

c)      What
are the well ordering manners for this type of company?

 

 

1.4 Research Objectives

Main
Objective

·        
Explore determinants of Non- moving Stock of Spare Parts (with Special
Reference to Ford Sri Lanka).

Sub Objectives

·        
To identify well ordering manner.

·        
To improvement of financial profitability
of the company.

 

 

 

1.5
Importance of the Study

 

This study is very
significant for both to the company and to future researchers who interested
about the vehicle world. The company is point of view findings of the research
helps to improve their business profitability through removing non moving stock
and invest finance of the company in finance earning ways. Simply the company
focuses to reduce the stock maintenance cost and they would find to well
ordering manner and keep quality parts with them.

 

Not only than that
there are many benefits through the implementing the business profitability and
overall business performance through this study. Such as,

 

– Help to bring
positive image in the company or increase the goodwill within the industry.

– The company aiming to
work with future targets through these types of researches. (As an    example company encourage to establish
research and development department).

– Give clear direction
to the company about the supply chain.

– Give sound knowledge
to the customers about the company.