Case Study of Scientific Glass
Scientific Glass, Inc. (SG), founded in 1992, was a midsize player in the industry that provided specialized glassware for laboratory and research facilities. Enjoying annual sales of $86 million for 2009 and an above-average growth in the industry, SG faced a constant challenge of competition with both large laboratory equipment providers and smaller glassware provider. To stay at leading position in such a highly competitive industry, the company had established its own dedicated direct sales force along with the attempt to increase customer service levels and improve customer response times by adding additional warehouses. By the end of 2008, in addition to the two original warehouses, SG had managed to bring on line six more warehouses strategically spread out over North America. The company had identified a substantially increasing inventory levels that tied up extra capital and could jeopardize the company’s ability to further expand if the problem persisted. Moreover, the debt to total capital ratio of the company had exceeded its set target of 40%. There was also a mismatch in the inventory records that computer records failed to keep up with changes in actual inventory. However, the critical problem was believed to be the high inventory level, which would help solve the other problems spontaneously once it was solved. Besides, the company’s historically set inventory control policies were regularly violated, which had further increased the inventory level and tied up even more capital. To decrease the current inventory level and set up a more efficient inventory management system, two main alternatives should be considered. Firstly, related policies could be revised to alleviate this inventory problem; secondly, the warehouses could be rearranged and restructured to address the inventory issue. However, the first proposal of revising polices were found to be undesirable among sales managers as they believed it would undermine their influences on the