Table of Contents
Inventory management is an important part of logistics at IKEA as the company has more than 11,000 articles. The Store Logistics Manager is accountable for ensuring adherence to inventory routines and more specifically, the Sales and Supply Support Manager and the Goods Flow Manager are responsible for their implementation. Merchandise Handling System (MHS) is one of the tools for inventory management used by the logistics team. MHS is the biggest and the central system to all business areas within IKEA. It provides functionality for booking orders, customer returns and recovery, stock replenishment, sales forecasting, warehouse management, cash management and sales statistics. MHS spans over 300 IKEA stores with 75000+ users around the world. The Inventory Types can be categorized into 4 main areas: Spot Inventory, Storage Location Correction, Cyclical Inventory and Annual Inventory.
Spot Inventory. This inventory type is used continuously throughout the year to correct the Base on Hand figures. The aim of this inventory type is to show a correct value in units at all times.The spot inventory is the main instrument to maintain an accurate MHS stock balance and identify any problems with any stock affecting routines used in the store. The purpose of using this inventory procedure is to ensure data quality in the store and improve service level to the customers. There is an evening calculates all total figures for the day (ex. sales, returns) on daily basis. Since the Base on Hand figures are updated during the evening batch, the best time to complete a spot inventory is after the evening batch has run and before store opening, usually it happens at 3am. Thus, every night a group of people, called counters, count certain number of articles. Counters are trained every 3 months. A list of items that they have to count is different for every day and is prepared by Inventory Specialist. There are five ways to decide what articles to count:
I: Manually flagged– run daily. Ex: Somebody from co-workers said that it is not in the warehouse/sales bin while the system shows that it’s in stock. N: Negative BOH – run daily less. Ex: iSell (internal sales system mostly used by co-workers in the showroom) shows the product quantity less than zero meaning it is oversold. P: Articles that meet the low level parameters for the first time - run daily. Ex: Fabrics in Textiles department are sold in meters, cash lines enter meters in the system, returns department counts in meters, but the supplier sells it to the store in centimeters, logistics team counts in centimeters. Usage of different measurement scales often leads to differences in product availability numbers. It needs to be checked. S: Articles on the 6807 report - run weekly (Sunday or Monday). If an article has zero sales for the past 3 weeks, it is likely to be not in stock. . D: SGF greater than BOH - run weekly. That means that certain articles might be available in the warehouse but they are not available for the customers (ex: sit on the high self or in the full-serve section).
Storage Location Correction. This inventory does not create a Transfer Type (example of the Transfer Type: the product was moved from the warehouse to display in the showroom), but controls and where necessary, acts as the tool to correct the stored goods in SGF (the solution that supports the Goods Flow operations in the IKEA store). If storage location corrections are carried out at regular intervals then the time needed for spot inventory is reduced. Cyclical Inventory. This inventory process ensures that all stock articles get counted at least once a year and all storage locations get counted at least twice a year. The spot inventory and storage...
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