eThesis - School of Business electronic theses

Every company wants to be efficient, make the most of its processes and utilize the expertise of its employees in the best possible manner. However, very often there are inefficiencies in every-day operations, which can mean that a company loses the potential advantages and planned benefits of its processes. Inefficiencies can also cause lack of motivation among employees, and thus a company might not get the best possible performance and potential out of its employees.

This thesis has been written in order to identify causes behind inefficient materials management. The thesis has been done for a case company which operates in food industry, and the thesis aims at answering three questions: why do the real-life processes differ from defined replenishment processes; what implications follow when real-life processes do not match with defined processes; and how the situation can be adjusted and corrected.

Reasons for inefficiencies can be found in many areas of an organization and its operations. For instance, there can be a poor fit between strategy and organization, operational decision-making can be based on poor parameters, or employees might have received poor training. There is a lot of research that focuses on these topics separately - strategies, optimizing inventory management, and human behavior in organizations - but there is not much research that combines these areas. This thesis combines those three topics in the framework that is created based on literature. The framework collects different types of factors that can affect the efficiency of centralized procurement function and replenishment function from a plant point-of-view. In testing the framework, a qualitative study was conducted. Based on interviews and writer's own observations, the relevancy of the factors identified in the framework was tested in the case company, and the results are presented utilizing the framework.

The three different areas of literature offered partly very similar reasons for non-compliant processes. For example, insufficient management, lack of proper KPIs, or lack of IT system training were mentioned as pitfalls in all three areas of literature. Of course, there were also area-specific factors. For the case company, the main reasons behind inefficiencies in the materials management process were related to organizational structure, inadequate cross-functional participation, and role unclarity. The implications that follow the inefficiencies in the case company can be summarized in three main points: incorrect, incomplete or too late data, excess workload and unmotivation at times. In the end of this thesis, a group of improvement proposals are presented for the case company. The improvement suggestions are divided into management-related, roles & responsibilities -related, process-related, information & communication -related, and technical propositions.