Inventory Management

Topics: Inventory, Inventory control system, FIFO and LIFO accounting Pages: 6 (1897 words) Published: October 30, 2010
Inventory systems are tools used to help organizations keep track of their inventory. Team “A”, in Professor Neil’s Quantitative Reasoning Class introduced each one of their organization’s inventory system to the team for analysis and comparison. Each team-member, Donna, Nikki, Jerome, Jennifer and Adrian, provided a brief description of their company’s inventory system as well as a list of advantages and disadvantages. The companies include PetSmart, Starbucks, Newlife, AVON and GameStop. Each Inventory system was chosen based on the needs of each organization. PetSmart’s Inventory System

PetSmart and there Out of Stock inventory system, is one of the largest providers of products, services and solutions for the lifetime needs of pets. With more than 860 stores in the United States and Canada, PetSmarts annual revenue is over $3.8 billion. They are on the Fortune 500 list at 28th topping the list for specialty pet retailers. PetSmart’s strategy is to attain and attract their customers by becoming the preferred provider of Total Lifetime Care for pets. PetSmart, along with Shop'n Chek, has integrated a suite of customer experience and merchandising solution including in-store, phone and catalog call center mystery shopping and price integrity audits, all focused on PerSmart's goal to deliver complete customer satisfaction. In gathering feedback from their customers, PetSmart operations executives began to receive complaints about their out-of-stock items. According to industry studies, more than $6 billion of revenues is lost due to products begin out-of-stock.  Here is what the audit results revealed:

Identified specific gaps in the inventory of key products across all stores.

Implemented changes to their supply and inventory management programs.

Established a "hole-counting" daily programs where the manager walks the store each

morning and provides an update to corporate headquarters.

Uncovered a glitch where inventory control alerts were not correctly set for newly opened stores.

These were quantitative results of the in-stock audit:

Reported boosts in-stock rates for the 150 items by about 4%.

Contributed to a 4.5% increase in comparable store sale from the 4th quarter of 2008 to the 4th quarter of 2009.  
The financial and procedural impacts of Shop'n Chek's in stock audit for PetSmart had been significant. With this ongoing program has helped ensure that pet owner at PetSmart can count on finding the products they want in-stock at every visit. GameStop’s Inventory System

The video game giant known as GameStop uses an inventory system based off SKU’s (stock keeping units) which is ever changing. Their 5,000 unit systems are based off of the ABC Inventory Management System. This ranking system states that only a few of the items account for most of the inventory value which is measured by dollar usage (demand times cost) This allows them to focus on only items on the store that has the most influence on the inventory value. The ranking system used is broken down into these three areas: A Ranked Items- These are items comprised of the video and pc games which account for 50% of the SKU’s. B Ranked Items- These items consist of the video game consoles themselves, (X-Box 360, Nintendo Wii, Playstation 3, Playstation 2, Nintendo DS and Playstation Portable). These account for 30% of the SKU’s. C Ranked Items- These deal with video game hardware such as controllers, memory cards, power cords, etc taking up the remaining 20%. GameStop also utilizes point of sale technology which shows daily sales and in store stock title store by store within the region or district. This system automatically generates other shipments to keep up with demand. This also allows each store to carry merchandise that is tailored to its rate of sale. In other words, they carry what sells the most. The point of sale technology also allows GameStop to accurately track transactions, trades dealing with...
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