Question: Conduct research on Wal Mart Inventory Management System.
Evaluate on how the system is benefiting Wal Mart.
Write a summary of your findings.
Wal Mart Inventory Management System.
Basically, the suppliers don't have a choice in the matter. Wal-Mart's business, even with the demands on service, is too good to pass up. But, Wal-Mart is not about to have a stock out due to some supplier's inability to provide a 99% service level. Wal-Mart, like many huge companies, will not wait. Many companies are:
"requiring shorter lead times even as more companies implement 'zero tolerance' policies for late shipments."
Zero tolerance is a hell of a statement from a company that knows service level. To provide even a 97% service level compared to a 95% service can result in a huge increase in inventory. Zero-tolerance is wild. In fact it is actually impossible. No matter what a company holds in inventory, there is always the possibility that Wal-Mart could order one more than that. Couple this with a shorter lead time to Wal-Mart and inventories are staggering. (Inventory Management Review, 2006)
Not only does Wal-Mart demand what they want when they want it, but also, as one Logistics Management survey respondent said regarding why he has to hold more inventory:
"Wal-Mart is ordering fewer cases more frequently"
For a company, this means that they can either produce smaller batches, or hold onto more inventory. Because if a company cannot produce less and faster, than they have to produce a large amount and then, instead of producing a large amount and getting rid of it all at once, they have to get rid of it slowly over time, which increases average inventory.
While Wal-Mart may be getting the good end of the deal, one thing is for sure, there's a reason suppliers put up with these demands, and it's not because the business with Wal-Mart is bad. (Inventory Management Review, 2006)
Efficient inventory control system
With those kinds of numbers, having an effective, efficient inventory control system, or inventory management system, is imperative. Wal-Mart's system helps it maintain its signature "everyday low prices" by telling store managers which products are selling and which are taking up shelf and warehouse space. (Howstuffworks.com, 2011)
Inventory management systems are the rule for such enterprises, but smaller businesses and vendors use them, too. The systems ensure customers always have enough of what they want and balance that goal against a retailer's financial need to maintain as little stock as possible. Mismanaged inventory means disappointed customers, too much cash tied up in warehouses and slower sales. Factors such as quicker production cycles, a proliferation of products, multinational production contracts and the nature of the big-box store make them a necessity.Howstuffworks.com, 2011) (
Modern inventory management systems must have the ability to track sales and available inventory, communicate with suppliers in near real-time and receive and incorporate other data, such as seasonal demand. They also must be flexible, allowing for a merchant's intuition.
And, they must tell a store owner when it's time to reorder and how much to purchase.
To achieve this, inventory management systems pull together several technologies into one cohesive approach. Read on to learn about the history of inventory management systems and how modern systems work. (Howstuffworks.com, 2011)
Information technologies benefit in Inventory management:-
- Satellite communication system.
- By using IT capabilities Wal-Mart check & make the availability of customers demand.
- Automated Reordering System.
- Radio frequency system.
-Proofs to be magic wand
-Helps in keeping track of the inventory in stores (Scribd.com, 2008) References
Inventory Management Review Scribd.com
