Inventory Management at Wal-Mart - Essay Example
Inventory management is one of the most important aspects in retail industry. Wal-Mart has been successful partly due to its excellent inventory management strategy. The retail giant has devised various delivery plans, which the individual stores can choose from in order to satisfy individual needs. For example, stores within a certain area can receive supplies within a day thanks to the retailers accelerated delivery plan.
The hallmark of effectively tracking sales and inventories across Wal-Mart’s countrywide branches is the application of information and communication technology systems. It was essential for Wal-Mart to implement good information and communication systems in order to manage the increasing number of stores. This allowed Wal-Mart to manage inventory in all its stores from a central place.
Another feature of Wal-Mart’s inventory management is the decision to allow individual stores to manage their own inventory, reducing process across a wide variety of goods, and timely price cuts. Using its information technology capabilities, Wal-Mart was able to make the fast-moving goods more available in stock rather than reducing stock across board. In addition, information technology enabled the linking of Wal-Mart to suppliers. Automated reordering systems between the suppliers and the stores and distribution centers were implemented. For example, the IT collaboration between Procter & Gamble and Wal-Mart where supplies could be re-ordered from Procter & Gamble through satellite communication system became the cornerstone of the retailer’s efficient maintenance of fast-moving goods and higher cost-savings.
Hand-held computers popularly known as the “Magic Wand” are linked to the inventory in the store via a Radio Frequency Identification (RFID) tracking system to track in-store inventory and deliveries at the distribution centers. Point-of-Sale (POS) systems also play an important role in inventory management and supplies. These systems have enabled Wal-Mart to project the inventories and the quantity to be replenished based on sales thereby providing uninterrupted customer service.