Optimization of total finished goods inventory management in decentralized organisation: A Case Study on Atlas Copco Secoroc AB

Abstract: Introduction: Nowadays firms must focus on maintaining healthy finished goods inventory stocks in order to be able to decrease inventory costs, meet customer requirements and to obtain competitive advantage. However large decentralized manufacturing companies often face the problem of sub-optimization in inventory management in subsidiaries due to several different reasons. As a result, company loses its competitiveness. Thus, there is a need to coordinate inventory activities of subsidiaries to prevent sub-optimization. Purpose: The purpose of this thesis is to investigate whether coordination mechanisms highlighted in academic literature are used in practice on the example of manufacturing company with decentralized decision-making structure for optimization finished goods inventory stocks. Frame of reference: This research is based on theoretical framework and empirical findings. Empirical data were collected through personal interviews and retrieved from organisational documents. Methodology: The research strategy for this paper is a single case study. This strategy allows investigating topic in its real life context. The deductive approach is used for this research based on qualitative data. The major source of data collection was semi-structured interviews and the company's documents. For analysing data categorisation approach was applied. Conclusion: The study found that most of coordination mechanisms presented in scientific literature are used in practice. To achieve better results these mechanisms should be applied simultaneously and consistently since they complement each other. We also observed that coordination mechanisms indeed give positive results and are able to optimize inventory management.