Case Study of Stock Management System

In effect this operator getting the correct mathematical product to the guest in the right luff at the right period. When talking ab kayoed the client it is important to distinguish between the client in the street i.e. general public, and the guest, the slynessr, who is buy the slap-ups to sell on at well-nigh(prenominal) take. The term logistics applies to all guests but we be applying the term to the trader for the benefit of this hear.In recent years, stress upon logistics has become of predominant importance at all levels of trade and has become a major accent in big retail, oddly those with a advanced and fast turnover i.e. supermarkets.This is contemplateed in recent reportsA prime mark of both business should be eer to seek ways of cut down the entireness costs of ownership while big(p) their own costsK represent of ownership is the costs above those charged, for exercise, breed carrying, w atomic name 18housing and handling, club and caliber inspection. To minimalise these costs, large-scale retailers need spent capacious deals of coin upon centralized rip dispersion and computerized caudex-taking focusing remainss, to try and gain a competitive market advantage. Centralized argumentation dispersal involves using unrivalled as opposed to m some(prenominal) w arehouses to move on rake for more efficient transportation. Inventory management systems automate many of the lying-ins multiform in the controller of seam and reordering.With bug tabu effective distribution and effective archive management systems, former(a) activities and functions carried out within the company whitethorn at best, fail to be optimized and, at worst, be rendered a waist of metre if time. therefore no money and (or) time saved in the considerable term. leading of these management systems include the likes of J. Sinsbury, Tesco, Asda, Iceland and Safeway, the case study I shall discuss in this section of coursework.Safewa y has a gross gross gross revenue base ordering inventory management system, known as credit line Management III (SMIII), introduced in 1992/3. This was fully implemented to centrally distribute many of their product pukes, including grocery, beers, wines and spirits and non-food surgical incision items.SMIIIs aim was to improve the truth of spud ordered in the gun transports, reducing the number of out of melodic phrase father and therefor creating sales agreements maximization. Moreover reducing wastage, reducing back memorys and creating a consistency in merchandising practices.SMIII uses information collected in from individually one hive away to work out the sales approximate for each product using the descent inventory. It then converts these quantities for ordering. These processes hope on data input for verity. There are six key concepts involved in this process.Firstly, the sales forecast. Line by line information on sales is built up at the checkout. A forecast of how much more stock is likely to be present is then calculated for incoming ordering periods.The require is calculated using specific parameters for each line. The system moldiness take into discover how much stock the store already has the piazza allocated for each product the order life of products (when they become out-of-date) outstanding deliveries sales opportunities (promotions etc.) and current business policies. The system ordain then calculate how much stock is needed for sales and the standard needed to look at the shelves.Case Rounding rules are needed to convert the deuce figures, that of sales and to fill the ledge, for ordering. This is quite simple. The system go forth always order enough stock to fulfil the sales. It then decides according to the nub of shelf outer space, whether to round up or down to the nearest case to fill the shelves.It moldiness be noned that the accuracy of the orders generated by the system is only as good as the data input. selective information is obtained from a number of sources, therefor it relies upon each department or division getting its part of the process correct. The departments are accountable for entering product and item driveway information into SMIII and processing stock as followsTrading ranging, space tryst, units per outer (UPO), data integrity.Supply chain supply to depot, optimal lead times, data integrity.Distribution bringing of right stock to store at right time.Store replenishing shelves, see, correct bookstocks.If any one of these items is omitted then the process allow for fail. These above activities bear on the inventory and effigy, the deuce key aspects of SMIII.The system relies on faithful inventory data. Most item impulsion is updated automatically deliveries through the companies central distribution system and sales captured by s toleratening at the checkouts. The store though is undeniable to inform SMIII of any stock that enters or leaves the store through other channels. For example spoilage inter-store transfers inter-departmental transfers (e.g. purchases for the faculty restaurant) cross-picks (stock delivered but non ordered and vice versa) quality control (damaged stock that is non murderered for sale).Moreover stores take a bookstock check.. This is where a check is meetn for any product out of stock, or where stock levels are exceptionally utmost or low. If the bookstock is inaccurate, the system is informed, improving the accuracy of the coterminous order.The range refers to the authentic range of products the store holds. For instance, a smaller in-town supermarket will non supply the array of products that an out-of-town hypermarket will stock. Stocking plans are determined by the trading division and are transmitted to the store where they are accepted into the store range. Stores are essential to carry the full range of products within their plan size. This is an important factor because it s hows that stores are non allowed to delete products from the range. They are however allowed to change the space allocated to a product.SMIII calculates the optimum amount of money of stock required to cover stomached sales, safety stock levels (in cases where sales outstrip forecast) and stock levels required to master(prenominal)tain shelf presentation standards. In the case of groceries and farsighted life products if accurate fill and face information is not correctly input into the system by the store, shelf presentation whitethorn be moved(p) and, moreover, out of stocks or high back-stocks may occur. done these factors the, sales forecast is achieved. Inaccurate sales forecasts will closure in incorrect orders organism generated. This could payoff in out of stocks, excessive back-stocks and/or unnecessary wastage. The above factors essential(prenominal), in tern be under taken accurately. To achieve this the store must carry out a number of disciplines throughout, from stockroom level i.e. tidy, with stock in correct place to maximize stock level efficiency. Through to daily checks for out-of-date goods, and ensuring shelf space is allotted correctly and demonstrates are correct.A mid- break of day inspection of a Safeway supermarket has been undertaken. There were a number of factors that can be seen as unsatisfactory from the stores point of view. I shall undertake to identify theses and solve them with minimum break to the store.There were a number of line of works with the father department.Firstly presentation was poor in a number of the commodity groups such as root vegetables and loose apples. If the display does not look good or is not up to a honest standard, this can affect the nodes discussion to buy, this could affect forecasting levels especially if it occurred on more than one occasion. If the raise looks bad on a number of occasions it could affect the guests decision to fink at the store in the long term.Moreover, I f the displays are not full this may jeopardize the SMIIIs calculation of quantities reordered as it runs on the assumption that the shelves are always optimally filled. Therefore sales cannot be maximized as the space allocation is not organism followed. Finally it can be seen that if the display is bad this could mean that some of the arouse is macrocosm caused damage unnecessarily. Creating wastage and once more potentially affecting the customers decision to buy.This ineluctably to be screen out apace and efficiently, although not at a grumpy time, as from experience it can be off-putting trying to shop when volume are filling the shelves. Moreover it must be famed that blame should not necessarily be rested upon anyone out-of-pocket to it being a mid-morning inspection on a Fri daylight a popular day for the weekly shop, the morning probably being the busiest time especially just after the school run. It is quite possible and potential that the poor display is imputabl e to the morning rush of customers.There was only one item out of stock, cauliflower due to a delivery deficit at the depot. Obviously nothing can be done about this at store level. But this information needs to be input into the SMIII to keep the store inventory updated so that this will be taken into account when forecasting. This ponders well on the produce department as the whole range other than this is shown giving community the almost possible choice. There are wider implications for an out of stock item in a situation where there are two competing supermarkets. If a different item on someones shopping inclining is out of stock each week, it may be a factor in persuading them to shop elsewhere.The produce delivery was being worked and the shelves were in the process of being stocked. Although this may cause shoppers some irritate it shows that the department is keeping the stock rolling, maximizing space used in line with the SMIII intellection. Deliveries though shoul d ideally arive and be sorted before opening to minimise inconvenience for both the shopper and staff, as it is easier to attend to the task in an empty shop.Product quality was generally good, although a number of grapefruit, which were below standard, were now being removed. These grapefruit must then be counted and entered into the system to update the inventory for forecasting. It can be seen as good that the bad fruit were being removed, but bad stock must always be removed as soon as possible as customers will notice and may be put off purchasing. In a wider aspect though, perhaps stockholding levels should be looked at as they may surrender been in the store too long due to excess stock. This could too be damage through bad storage or transportation, which would need looking into if it recurred continuously. boilers suit it can be seen that bad stock, shortages and displays should be checked on a regular basis and sorted out as soon as possible. tidy sum look at these f actors when making buying decisions. This is concerned with relationship marketing where there should be a twin focus on total quality and divine service as a source of customer satisfaction. Customer satisfaction ensures better customer retention and therefor greater profitability.The customer can be put off by too many staff filling shelves as it can stave off from the pleasure of being able to ramble whilst shopping. Therefor a balance must be found.The forecasting potential was good in the produce section as long as out of stock and wastage was entered into the SMIII system. Otherwise stockholding levels could be affected especially with the non-full lines. Moreover the presentation must be kept to a high standard as this may affect peoples opinion of the shop and therefore customer loyalty.The grocery department had three main problem areas.The promotional point of sale was missing from an on-shelf promotion on the tea leaf/coffee section. This is a major problem as it would have a great affect on the forecasting. The store would expect to sell more of this product through the promotion, and therefor have ordered in more to compensate. Sales would not reflect the expected response to the promotion, as people would be unaware of it. This needs to be rectified as soon as possible and the system notified as the pass judgment extra demand would not be apparent. This would affect forecasting and therefore future orders potentially causing a shortage once the promotion was displayed.Loose stock was stacked behind other close products on the dope section and appeared to have been there for several weeks. This reflects bad organization. Stock may not be discover by the customer and space allocation disrupted. Space for the stock is allocated so that the system can accurately forecast the quantity of goods required to both fill the shelf and for sales. Using the space incorrectly can affect stockholding levels due to the amount predicted to be on the shelve s and in storage.Although actual recording of sales will not be affected, it must be noted that sales could be, if the product namely soup couldnt be found. This needs to be sorted out immediately, and could possibly reflect a lack of motivation in store, as the shelves were not stacked correctly. It also reflects badly on myself as playing manger, as this problem appeared to have been so for weeks. Store inspections must be held regularly to ensure this type of problem does not occur.