Edan Martes
Inventory management is the task of keeping track of the amount of products in inventory at any given time, while trying to keep the inventory costs as low as possible. A company can use different techniques to manage its inventory. One important aspect is demand planning and forecasting. If a company has a good overview of how many products it will sell during the next time period, it can make sure supply meets demand. The objective is to have enough products in inventory to avoid stock outs, while also avoiding dead stock. Dead stock refers to products in a warehouse that were not sold and therefore became outdated. The company cannot sell these products and will incur losses.
A well-known inventory management strategy is the Just-in-time strategy. This strategy tries to lower inventory costs by ordering and producing goods only when they are needed. Walmart and Decathlon use different strategies.
Walmart
Walmart is a big multinational company that sells a wide variety of products at a low price. In order for a company to do this it should find innovative ways to lower the company’s costs. One of the ways Walmart does this is by focussing on efficient logistics and skillful inventory management systems. A key factor of the management of Walmart’s inventory system is their cross-docking inventory system. Cross-docking is the movement of products from a manufacturer directly to the customer. This process minimizes material handling in between and the need of warehouses. Therefore, reducing costs related to transportation and warehousing. However, the downside of cross-docking is the increased risk concerning loss of inventory control.
Decathlon
Decathlon is a multinational sporting goods retailer and is different in terms of inventory. Decathlon uses a RFID system. In this system products are tagged with labels during the manufacturing process. Products go from the manufacturing plant directly to the stores and can be sold immediately. Once the products are in the stores they do not need to be labelled anymore and no inventory is needed. Decathlon stores do not have inventories and put all their products directly on the shelves. Furthermore, this has helped Decathlon improve their inventory control.
These examples make it clear that inventory management is a key role in logistics and that innovative ways of decreasing the company’s inventory leads to a reduction of costs.
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Business Logistics 