Cheng Lee, opted for early retirement to venture into business in 2014.As a chemical engineer, he already had identified a niche in the manufacturing sector. Using his savings from previous employment he incorporated Chevron Plc, a manufacturing firm for chemicals targeting the African market. The company produces three products; Alpha, Beta and Theta. Alpha and Theta are food additives while Beta is used as an ingredient in the paint industry. They are fast moving consumer products.

In the early days, Cheng engaged a few general staff to help him in material handling and stock control. However, as the business expanded, his personal attention was strained to the point he was not able to closely monitor the business. The staff performed tasks such as ordering, receiving and storage of stocks for raw materials and finished goods though they had no prior experience or training in stores and stock control. Goods were left lying on the floor in the stores as they had no stores knowledge.

The storage and handling equipment used were simple, resulting in breakages and pilferage. As the manager, Cheng was responsible for sales and marketing and could easily identify his clients by name. Personalised attention endeared him to his clients. With the rapid growth, Cheng was not able to keep track of the changes in the market due to increase in customers awareness and entry of new competitors. In fact, stock control was ad hoc and done purely on the rule of thumb.

The business was doing well and sales were increasing rapidly. As a matter of fact, several financial institutions had noticed him and were offering him very sweet deals for credit facilities.

As time went by, Cheng noticed a sharp decline in sales revenues. An audit report commissioned by him revealed that customer complaints have increased over quality concerns resulting in returns of goods by customers. When raw materials were received there was no quality checks and some materials were in excess of the requirements. The levels of losses, pilferage and wastage of materials was high. Ordering of raw materials was made in disregard of the demand. Some stocks of raw materials were bought though they were never needed. An employee broke his leg when he was hit by a box that fell from the shelf in the store. There was no material handling equipment in the stores. The store itself was a room that was previously used a dining room on the first floor.

Questions

From the case study,answer the following questions;

(a) Identify and explain the main challenges facing Chevron Plc .

(b) One of the key issues affecting chevron Plc is poor inventory management and control management. Advice Cheng on two stock control methods that he can use to turn his business around and how they work.

(c) The Just-in-time method of stock control is more of a philosophy than a technique. Explain.