Inventory Systems Summary
According to the U.S. Small Business Administration, “Inventory refers to stocks of anything necessary to do business” (U.S. Small Business Administration, 2010, pp 1-2). The U.S. Small Business Administration publication describes what constitutes successful inventory management (balancing cost versus benefits of inventory), including 1) Maintaining a wide assortment without spreading the rapidly moving items too thin, 2) Increasing inventory turnover without sacrificing service, 3) Keeping stock low without sacrificing performance ,
4) Obtaining lower prices by making volume purchases,
5) Maintaining an adequate inventory without an excess of obsolete items. Anyone in business must understand the business of inventory. Below is a look at six different inventory systems as well as a comparison of the advantages and disadvantages. Wal-Mart Inventory System
Wal-Mart runs its stores on a perpetual inventory system. This system recordsthe quantity of items sold as items are purchased. The computer system at Wal-Mart constantly keeps up with additions or deductions from inventory and tells management what items are on hand. The organization also conducts counts of employee manual counts of inventory periodically. When an item arrives at the Wal-Mart distribution center it is scanned into the inventory system. When the items are purchased by the consumer, the point-of-sale system reduces the inventory from that purchase. According to Wal-Mart’s Gail Lavielle, a leaner inventory will help clear out store clutter and help Wal-Mart focus on specific brands and products that consumers want (The Associated Press, 2006).
Advantages and Disadvantages of the Wal-Mart Inventory System The advantages of a perpetual inventory system are that inventory is quickly updated in real-time, which gives a constant picture of the inventory status. With this data, inventory counts...