Customer Management Analysis of Irish Plumbing & Heating Distribution System: A Simulation Study

The sudden burst of the property bubble, coupled with current global economic conditions has resulted in a huge decrease in demand for plumbing and heating fixtures in the Irish construction industry. Moreover, inefficient supply chain management policies have imposed further pressures on companies resulting in more system bottlenecks and unnecessary costs. Inventory management is seen as a functional area that can ease such bottlenecks and in turn increase supply chain efficiency, decrease costs and increase customer satisfaction. The challenge is to predict the balance of on-hand inventory and order quantity to optimise customer satisfaction and minimise inventory cost. It is also essential that managers clearly understand the cost effect stock-outs have on different groups of customer, i.e. customer segmentation policy. Traditional inventory mathematical techniques are inadequate in investigating the influence of customer segmentation policy on performance. To investigate this further, conceptual modelling using flowcharts and data flow diagrams in conjunction with simulation modelling and design of experiments have been developed to characterise the inventory management process of a plumbing and heating distribution centre. Significant process parameters where identified and examined with and without segmented customer management policies, aiming to achieve a high level of customer satisfaction rate at the lowest possible total cost.