Inventory Management

Assignment 2: Inventory Management

BUS 430: OPERATIONS MANAGEMENT

Service Companies

Types of Inventory

The two service businesses that I chose were Amazon and Wal-Mart. They are both a large corporation; they both sell a variety of goods and products. They have compatible prices; their prices are close to the same price. But when you look at the two, people tend to lean towards Amazon. Because of the convenience of shopping at home. Their prices are slightly lower as well. Amazon also offers one-day shipping for Prime members. This marketing strategy made Wal-Mart go and provide the same thing one-day shipping to keep up with Amazon.

Amazon Inventory Characteristics:

Amazon’s strides to be Earth’s most customer-centric company (Amazon,2020) where customers can locate and identify anything they might want to buy online and attempts to offer its customers the lowest possible prices.

Walmart Inventory Characteristics:

Walmart’s strides to save people money so they can live better (Walmart ,2020). It tells how the company explores to achieve critical strategies that can bring an extraordinary difference in anything it touches. Some of the factors that compare to this mission statement include: Changing people’s lives, Financial deliverance, and Topping expectations.

Goods and Services

Wal-Mart first opened July 2, 1962, something I did not know. Its inventory was a retail store like Sears and JC Penny’s. By 1990, Walmart had grown to be the largest retailer in the U.S. It started to branch out globally, opening a new store in Mexico and after opening more stores in the U.K., Germany, China, and Canada. Walmart’s inventory is consists of clothes, shoes, jewelry, household products, sporting goods, electronics, and much more…By 1999, Walmart had grown so huge it was the largest private employer in the U.S. but in the entire world, and two years later, Walmart also exceeded Exxon-Mobile (O’Connell, 2020). Walmart has Finished Goods Inventory, Transit Inventory, Buffer Inventory, Anticipation Inventory. Wal-Mart’s inventory can range from finished products to work in progress and raw materials. They have grocery food, clothes, toys, electronics, home items, and for a very competitive or low price.

With that being said, Amazon is arguably the most successful e-commerce company today. It started July 5, 1994, as an online bookstore, and now it has become an e-commerce company, with its distribution network that poses a threat to retailers like Wal-Mart and similar services alike. In 2006, the company started a Fulfillment by Amazon (FBA). This primarily monetized its incredible logistics system so that small business owners could benefit from the operation of a big corporation without the headaches of a big corporation (R. Bowles, 2020). Amazon carries every kind of inventory you name, clothes, shoes, household products, makeup, arts and crafts, and a massive variety of other products. It’s running right behind Wal-Mart and will catch up within a few years.

Company’s Inventory Role

Walmart and Amazon both have finished goods at the supplier and raw materials at the manufacturing companies. Amazon operates well over a million items in one of the various warehouses near metropolitan areas. The inventory ranges from finished goods to operating supply, repair, maintenance, work in process, and raw materials. These two companies can usually make use of three types of inventory – cycle, safety, and seasonal inventory. Cycle inventory is the stock a company holds to fill regular operating customer demand like items that you can find on shelves in some local retail stores. Safety inventory is the product stock, which is held by companies to better prepare for uncertain or variable demand; this is what Walmart carries.

Seasonal inventory is held to be made for periods of higher demand, mainly Christmas, Easter, and other public holidays, and with both of these stores, they both are in high demand. Overall, higher inventory levels typically mean higher possible responsiveness as well as increasing inventory carrying costs. But inventory requires space to store as well as employees who handle and control this stock regularly, and that is where Amazon comes in. Because they have massive warehouses with tons of merchandise on hand, but they also have small businesses that are third party sellers. The overall goal for inventory management is the decrease in inventory while keeping operations at a constant level that meets customer demand. A reduction of safety stock may work by limiting the change in terms of leadtime, demand, supply, and quality (Mangan et al., 2008).

Layouts

Walmart uses a product, process, cellular, and fixed-position layouts to build many kinds of work Wal-Mart facility layout; the customer area is designed in a process layout. Now Amazon has 100,000 robots that work collectively as a working organization in its warehouses. This increases production by decreasing the time of getting the product. Robots work based on bar codes to give carts to people for orders, and it’s arranged in a process layout. Both companies have many warehouses where goods are delivered, processed, and shipped, they both use the fix position layout. Amazon uses the fix position layout because they have products at a low price based on competitor prices. If either of these companies didn’t have layouts the quality of service assured would not be achievable. Layouts are needed to build, create, and improve productivity. And that produces profits.

Supply chain

Supply chain management the flow of goods and services and includes all processes that convert raw materials into final products to be managed. These two companies use this to recognize in-house supply chain abilities and scale customer demand. Supply chain management can create a competitive advantage in the

business. Wal-Mart concentrates on the metrics, delivery reliability, and responsiveness. Wal-Mart has used technology and innovative approaches to stock products. That can be more solid. Walmart has vendor managed inventory; this means manufacturers became responsible for maintaining their products in Walmart’s warehouses. They use cross-docking as a logistics method; this is that Wal-Mart’s strategy is to provide inventory efficiently (M.DeHart, 2015).

Improve Inventory Management

Both companies have exceptional handling of their inventory. Several things can happen with a shipment that is positive or negative, and they have found ways to satisfy customers and keep them returning. They both are innovative in the way they are developing relationships with more companies and networking to give more and gain more, like software for merchants and workers to give their all to be more productive, to make the companies profitable. Wal-Mart, I would say, needs to improve the way they process the inventory when it gets to warehouses and the stores so that the customers will get the product quicker. Amazon needs to concentrate on improving the process by improving customer service on all products as far as returns for third-party vendors because this process is not 100% satisfying to customers.

SOURCES

https://www.warehouseanywhere.com/resources/amazon-inventory-management/

https://www.logiwa.com/blog/amazon-inventory-management-system

https://www.avalara.com/us/en/blog/2015/12/how-amazon-keeps-track-of-your-fba-inventory.html

http://panmore.com/amazon-com-inc-operations-management-10-decisions-areas-productivity