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Inventory management at WAL-MART - Case Study Example

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Sam Walton opened the first Wal-Mart discount store in the year 1962. The first Wal-Mart Discount store that he opened was in a City in Rogers, Arkansas. Currently, there are 941 stores all across the United States (Frat Files). One advantage of Wal-Mart and probably its reason for success was that it started making its discount stores a little outside the city so that it is more convenient for customers to come and shop there, with its spacious aisles and enough space for everyone to park and large displays…
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Inventory management at WAL-MART
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Download file to see previous pages It also succeeded due to its global strategies. It became the first private-sector company in the world to have employed over one million personnel. It provides large spacious, wide, neat, brightly-lit aisles and shelves stocked with area for people to look around and provide a variety of goods. The average size of a Wal-Mart store is 107,000 square feet (www.walmart.com). Each store employs about 225 people. The employees are called associates as they hold value for the company (Frat Files). The stores feature a variety of quality, value-priced general merchandise, including (www.walmart.com):
Wal-Mart operates each store, from the products it stocks, to the front-end equipment that helps speed checkout, with the same philosophy: provide everyday low prices and superior customer service. Lower prices also eliminate the expense of frequent sales promotions and sales are more predictable. Wal-Mart has invested heavily in its unique cross-docking inventory system. Cross docking has enabled Wal-Mart to achieve economies of scale which reduce its costs of sales. With this system, goods are continuously delivered to stores within 48 hours and often without having to stock them. This allows Wal-Mart to replenish the shelves 4 times faster than its competition. Wal-Mart's ability to replenish theirs shelves four times faster than its competition is just another advantage they have over competition. Wal-Mart leverages its buying power through purchasing in bulks and distributing the goods on its own. Wal-Mart guarantees everyday low prices and considers them the one stop shop.
INVENTORY MANAGEMENT at WAL-MART
Just-in-time inventory (JIT) is the concept of only carrying as much inventory as needed to supply to customers or consumers. Many companies are using JIT to reduce inventory costs and increase gross profits (Damiano, 2005). It makes more sense for companies to use their dollars elsewhere, rather than tying them up in inventory that is just sitting in a warehouse. Wal-Mart's inventory philosophy focuses on getting the good out of the shelves and into the customers hand in the quickest and most cost efficient way as possible and Wal-Mart is a paragon of such efficiency.
JIT (Just in Time) is an inventory management technique invented by the Japanese. The first users of this technique are said to be the Toyota people and to this day, this technique is being effectively used by them. The concept behind JIT is that it optimizes the production process byreducing waste and keeping negligible inventory (Epps, 1995). Inventory has a holding cost in terms of keeping the excess inventory in warehouses whose rent has to be paid thus increasing the cost of the inventory. As a retailer, Wal-Mart has been able to achieve respectable leadership by using this technique to reduce the holding costs and decreasing wastages. The most important factor in having a Just-In-Time inventory system is to have the best logistics system in place. This includes having clear transport routes, ...Download file to see next pagesRead More
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