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Inventory Systems

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Businesses and Inventory Systems

Inventory Systems
Inventory systems are tracking systems designed for companies to maintain an accurate accountability of products in stock or on hand. Each time items are added or removed from inventory items on hand either decrease or increase in number.
This paper will review inventory systems within Starbucks, Wal- Mart, Dell, Arby’s, and Starbucks. The paper will also provide information regarding the success of the inventory systems and if the companies are happy with the current systems.
Businesses and Inventory Systems
Dell is a leading global software company that manufactures desktop computers, notebook computers, network servers, work stations, and storage products. Dell uses the Just-In Time inventory system. Just-In-Time means a company can receive raw materials just in time to go into production and complete and assemble manufacturing parts just in time to ship to customers (Accounting 4 Management, 2012). The advantages of the Just-In-Time system are that it permits Dell to reduce overhead and have certainty that products are available. The Just –In-Time inventory system reduces the cost of doing business. For example, Dell does not have to spend an enormous amount of funds on the cost of warehouse storage and the customer receives the benefit of lower cost for products. The company has a high satisfaction rating because of their ability to produce products at a fast rate. The challenge includes the possibility of the company not receiving the products from suppliers on time. This can cause a delay in shipping of Dell products to its customers. Dell is happy and will continue the current inventory system because of cost savings and reduction in the time to get products to consumers.
Wal-Mart uses an inventory tracking system known as SMART to monitor its inventory and keep track of items sold. When an item is sold or returned, the inventory system automatically updates the physical inventory. This form of inventory management provides Wal-Mart with an efficient, effective way to avoid overstocking and reports those items selling slowly. This allows automatic reordering and better coordination. The inventory system has advantages that benefits Wal-Mart because reports indicates the profit making items. Based on trend analysis Wal-Mart disburses less for inventory maintenance compared to some of the major competitors. Using its sophisticated computer-based warehouses, the turnaround time for items to arrive and leave without sitting on shelves are increasingly high. Wal-Mart is content with its current inventory system. They invest large amounts of money into the system that other large retail chains currently use. They continue to enhance the inventory system to meet technological changes that enable them to remain a financial giant. As with any system there are challenges with the radio-frequency system. Problems arise with metal because metal reflect radio-frequency and liquid items absorbing them. These challenges limit the use of technology. Wal-Mart has the capability to maintain the competitive edge with its highly sophisticated and technological inventory system (Bagh, 2010).
Arby’s is a fast food restaurant founded July1964 by the Raffel brothers of Boardman, Ohio ("Arby’s," 2012, para. 1). Strict guidelines are in place on inventory storage, cooking, and hold times. The company uses the Point of Sales (POS) system to monitor inventory and sales. The advantage of this system is the precise control the store has over inventory control. The system helps management know the amount of food to prepare daily. Disadvantages are the time it takes management to run hourly reports during the day and adjust cook totals on beef. Each hour the beef proficiencies must be complete to ensure the store is not losing profit. The system is not flawless but the organization has been using it since 1990. The system helps ensure that customers receive quality products and waste is minimal. Arby’s is content with the current inventory system.
Starbucks is one of the leading companies that purchases and roast coffee products to sell to the public. As stated by Royalty, M. (2010) “Starbucks does its shipping and ordering in two ways. These systems are in place to help reduce waste and keep the inventory to the lowest. The first is for retail of the store using the P-System. The order is placed every seven days with a three day lead.” She also goes on to state “Over stock for the entire store is set at 15% to ensure enough retail for customers.” Royalty, M., (2010) Starbucks uses yet another inventory system called EOQ, to complete second orders daily. These orders are for materials used every day in the store, e.g., milk, espresso, and cups. Starbucks carry the same items most of the seasons and the demand on those items is written within the system to make sure these products are always available. Starbucks believes that the current system provides the best inventory results for the company.
Costco works from the premise that its merchandise “will produce high sales volumes and rapid inventory turnover… [and enables it] to operate profitably at a significantly lower gross margin than traditional wholesalers, mass merchandisers, supermarkets, and supercenters” (Costco, 2007) (needs page number because it’s a direct quote)
Working with Information Resources, Costco uses an innovative inventory system technology that provides real- time inventory information. The name of the system is Collaborative Retail Exchange (CRX) (Costco, 2009). Vetted and approved suppliers are allowed access to CRX to view the level of inventory and are alerted when stock starts getting low. Suppliers are notified (along with Costco inventory managers) of inventory getting low and can access the system directly to fill an order without the manager’s intervention. Suppliers are responsible for their own inventory and managers can manage without the added step of ordering. This system is uses automation and estimates from past sales and estimates for future demand in combination with a sales cushion during lead time.
Costco’s system of inventory management is a streamlined, smart way to keep costs down and still run an effective inventory and wholesale operation. Costco is not planning to change the current system.
Summary
Dell, Wal-Mart, Arby’s, Starbucks, and Costco use an inventory system that best fits the needs of the company and demand for supplies. Possessing an inventory system in place ensures that companies have a way to track products they sell to the public. Inventory systems are also tools to track the profit and loss of a company through inventory control. Not acquiring an inventory system can make it difficult for companies to be profitable and competitive.

References
About Arby’s. (2012). Retrieved from http://www.arbys.com/about.html
Accounting 4 Management. (2012), Just in Time Manufacturing and Inventory Control System, Retrieved on July 27, 2012 frohttp://accounting4management.com/just_in_time.htm
Bagh, C. (2010). Wal-Mart's use of RFID tags . Retrieved from http://www.ibtimes.com/articles/ 38270/20100726/wal-mart-rfid.htm
Costco (2007) Annual Report Retrieved from http://media.corporate- ir.net/media_files/irol/83/83830/Annual_Report_2007.pdf Costco & IRI Team (2009) Costco: Inventory Management. Retrieved from http://costcoteam3.blogspot.com/2009/05/costco-inventory-management.html
Royalty, M. (2010), Team 1 Starbucks, Inventory Management, Retrieved on July 28, 2012, from http://team1starbucks.blogspot.com/2010/09/inventory-management.html

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